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Exchange Rate Regimes and Trade: Is Africa Different?

Mahvash Qureshi and Charalambos Tsangarides ()

No 14, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper revisits the link between exchange rate regimes and trade in the context of Africa’s exchange rate arrangements. Applying an augmented gravity model that includes measures of currency unions and pegged regimes, the paper compares Africa’s experience with that of the world. Our results suggest that both currency unions and direct pegs promote bilateral trade in Africa vis-à-vis more flexible exchange rate regimes,and that their effect is almost double for the region than that for an average country in the world sample. Further, we find evidence that the effect of conventional pegs is at least as large as that of currency unions in Africa, and that the benefits of fixed exchange rate regimes stem through channels in addition to reduced exchange rate volatility.

Keywords: currency unions; fixed exchange rate regimes; Africa (search for similar items in EconPapers)
Date: 2011
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http://www.wider.unu.edu/sites/default/files/wp2011-014.pdf

Related works:
Journal Article: Hard or Soft Pegs? Choice of Exchange Rate Regime and Trade in Africa (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:wp2011-14

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