International Trade and Currency Exchange

Helene Rey

The Review of Economic Studies, 2001, vol. 68, issue 2, 443-464

Abstract: On the international scene, away from national legal rules, the use of different currencies is largely due to the operation of the "Invisible Hand" The paper develops a three-country model of the world economy. This links real trade patterns with currency exchange structures in a general equilibrium framework which includes transaction costs on foreign exchange markets. In the presence of strategic complementarities, there are multiple equilibrium structures of currency exchange for a given underlying real trade pattern. The existence conditions of these different equilibria are characterized, using the trade links between countries as the key parameters. Finally, repercussions on world output of the choice of a currency exchange structure are analysed.

Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (160)

Downloads: (external link)
http://hdl.handle.net/10.1111/1467-937X.00176 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: International Trade and Currency Exchange (1999)
Working Paper: International Trade and Currency Exchange (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:68:y:2001:i:2:p:443-464.

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().