A Model of Trade and Exchange Rate Projections : Equations and Parameters

This paper contains a detailed description of a model of trade and exchange rates. A verbal summary of the model may be found in NBER Working Paper #389. The model contains equations for import demands, bilateral trade flows and trade prices for 26 regions and three commodities. A simple exchange rate model used developments in current accounts to model changes in nominal exchange rates. The regions covered are the twenty-three OECD countries and three non-OECD region: LDCs, OPEC, and the centrally planned economies (CPEs). Sector A contains an algebraic description of the model and a glossary of variables and parameters. Section B is a detailed discussion of the equations and the sources of the parameter values