EXCHANGE RATE REGIMES AND TRADE

Christopher Adam () and David Cobham

Manchester School, 2007, vol. 75, issue s1, 44-63

Abstract: A ‘new version’ of the gravity model is used to estimate the effect of a full range of de facto exchange rate regimes on bilateral trade. The results indicate that, while participation in a common currency union is typically strongly ‘pro‐trade’, other exchange rate regimes which lower the exchange rate uncertainty and transactions costs associated with international trade are significantly more pro‐trade than the default regime of a ‘double float’. They suggest that the direct and indirect trade‐creating effects of these regimes on uncertainty and transactions costs tend to outweigh the trade‐diverting substitution effects. Tariff‐equivalent monetary barriers associated with each exchange rate regime are also calculated.

Date: 2007
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https://doi.org/10.1111/j.1467-9957.2007.01037.x

Related works:
Working Paper: Exchange rate regimes and trade (2007)
Working Paper: Exchange Rate Regimes and Trade (2005)
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