Exchange Rate Volatility and World Trade

Exchange Rate Volatility and World Trade PDF

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 1984-07-08

Total Pages: 76

ISBN-13: 9781557750655

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In View of the continuation of substantial movements in exchange rate relationships among major currencies, the recent increase in protectionist pressures, and the disappointing performance of world trade, renewed concern has been expressed about the possible adverse effects of exchange rate variability on trade. Against the background of this concern, the following decision was reached at the ministerial meeting of the General Agreement of Tariffs and Trade (GATT) in November 1982.

A New Look at Exchange Rate Volatility and Trade Flows

A New Look at Exchange Rate Volatility and Trade Flows PDF

Author: Mr. Peter B. Clark

Publisher: International Monetary Fund

Published: 2004-09-30

Total Pages: 72

ISBN-13: 1452733872

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The effect of exchange rate volatility on trade flows was examined by a 1984 IMF study on G-7 countries. Over the past two decades, many developments in the world economy, such as the currency crises in the 1990s and increasing cross-border capital flows, may have exacerbated exchange rate volatility, while others, such as a deepening of the market in foreign exchange hedging instruments, may have reduced the impact of volatility on trade flows. Using recent advances in the economic theories on trade and in statistical methodologies, this paper revisits this important issue by taking into account these new developments and examining their effects on developing and transition economies, as well as on developed countries.

Exchange Rate Volatility, Pricing to Market and Trade Smoothing

Exchange Rate Volatility, Pricing to Market and Trade Smoothing PDF

Author: Mr.Peter B. Clark

Publisher: International Monetary Fund

Published: 1997-10-01

Total Pages: 40

ISBN-13: 1451936621

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This paper investigates the consequences of exchange rate volatility on the variability of export prices and quantities in the presence of market segmentation and pricing to market. Firms stabilize destination prices through systematic price discrimination, limiting the degree of exchange rate pass-through. Consequently, the variability of exchange rates is not fully translated into prices and quantities at the point of destination. Empirical estimates using aggregate price data for the G-7 industrial countries show incomplete pass-through in variances, with considerable variation among these countries. U.S. industry specific data also indicate incomplete pass-through in most cases, with considerable variation across industries.

A New Look at Exchange Rate Volatility and Trade Flows

A New Look at Exchange Rate Volatility and Trade Flows PDF

Author: Peter Barton Clark

Publisher: Occasional Papers

Published: 2004

Total Pages: 63

ISBN-13: 9781589063587

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The effect of exchange rate volatility on trade flows was examined by a 1984 IMF study on G-7 countries. Over the past two decades, many developments in the world economy, such as the currency crises in the 1990s and increasing cross-border capital flows, may have exacerbated exchange rate volatility, while others, such as a deepening of the market in foreign exchange hedging instruments, may have reduced the impact of volatility on trade flows. Using recent advances in the economic theories on trade and in statistical methodologies, this paper revisits this important issue by taking into account these new developments and examining their effects on developing and transition economies, as well as on developed countries.

Exchange Rate Fluctuations and Trade Flows

Exchange Rate Fluctuations and Trade Flows PDF

Author: Mr.Giovanni Dell'Ariccia

Publisher: International Monetary Fund

Published: 1998-08-01

Total Pages: 28

ISBN-13: 1451852959

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This paper analyzes the effects of exchange rate volatility on bilateral trade flows. Through use of a gravity model and panel data from western Europe, exchange rate uncertainty is found to have a negative effect on international trade. The results seem to be robust with respect to the particular measures representing exchange rate uncertainty. Particular attention is reserved for problems of simultaneous causality. The negative correlation between trade and bilateral volatility remains significant after controlling for the simultaneity bias. However, a Hausman test rejects the hypothesis of the absence of simultaneous causality.

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