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Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries

  • Reinhart, Carmen

Devaluation is an integral part of adjustment in many developing countries, particularly relied upon by countries facing large external imbalances. A devaluation can only reduce trade imbalances if it translates to a real devaluation and if trade flows respond to relative prices in a sig nificant and predictable manner. However, a recent strand in the empirical trade literature has questioned the existence of a stable relationship between trade flows and its traditional determinants. This paper re-examines the relationship between relative prices and imports and exports in a sample of 12 developing countries.

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File URL: http://mpra.ub.uni-muenchen.de/6974/1/MPRA_paper_6974.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6974.

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Date of creation: Jun 1995
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Publication status: Published in IMF Staff Papers 2.42(1995): pp. 290-312
Handle: RePEc:pra:mprapa:6974
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