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

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: devaluation; imports; exports; trade elasticities (search for similar items in EconPapers)
JEL-codes: F32 F1 (search for similar items in EconPapers)
Date: Written 1995-06
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Published in IMF Staff Papers 2.42(1995): pp. 290-312

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Related works:
Working Paper: Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries (1994)
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