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

Carmen Reinhart

No 1994/140, IMF Working Papers from International Monetary Fund

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 significant 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: WP; developing country export; relative price; income elasticity; utility function; import demand; Trade balance; Imports; Exports; Personal income; Price elasticity; Africa; Asia and Pacific (search for similar items in EconPapers)
Pages: 30
Date: 1994-11-01
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries (1995)
Working Paper: Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries (1995)
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