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Merchandise Trade Balances of Less Developed Countries and Exchange Rate of the U.S. Dollar: Cases of Iran, Venezuela & Saudi Arabia

  • Ayoub Yousefi
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    This study examines the effects of changes in the exchange rate of the U.S. dollar on the trade balances of three oil-exporting countries, Iran, Venezuela, and Saudi Arabia. An exchange rate pass-through model is applied to allow changes in the exchange rate of the dollar to affect prices of traded goods. We found that changes in the effective exchange rate of the dollar pass through partially to these countries' import prices. For the export prices, under the floating exchange rate system depreciation of the dollar was found to cause export prices of these countries (except Saudi Arabia) to rise. While changes in the exchange rate of the dollar influence these countries' trade balances, the long-run trade balance adjustments seem to follow different patterns and time profiles.

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    Paper provided by University of Waterloo, Department of Economics in its series Working Papers with number 00002.

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    Length: 37 pages
    Date of creation: Feb 2000
    Date of revision: Feb 2000
    Handle: RePEc:wat:wpaper:00002
    Contact details of provider: Postal: Waterloo, Ontario, N2L 3G1
    Phone: (519) 888-4567 ext 33695
    Fax: (519) 725-0530
    Web page: http://economics.uwaterloo.ca/

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