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

Ayoub Yousefi

No 2, Working Papers from University of Waterloo, Department of Economics

Abstract: 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.

Keywords: Trade Balance; J-curve; Invoicing Currency; Exchange Rate pass-through; Crude Oil. (search for similar items in EconPapers)
JEL-codes: F14 F31 F32 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2000-02, Revised 2000-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:wat:wpaper:00002

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