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One Money, One Market : Estimating the Effect of Common Currencies on Trade
Rose, Andrew Kenan - 2021
A gravity model is used to assess the separate effects of exchange rate volatility and currency unions on international … trade. The panel data set used includes bilateral observations for five years spanning 1970 through 1990 for 186 countries … exchange rate volatility, even after controlling for a host of features, including the endogenous nature of the exchange rate …
Persistent link: https://www.econbiz.de/10013231861
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Fixed Versus Flexible : Lessons from EMS Order Flow
Killeen, William P. - 2010
This paper addresses the puzzle of regime-dependent volatility in foreign exchange. We extend the literature in two … induce volatility under flexible rates because they have portfolio-balance effects on price, whereas under fixed rates the …
Persistent link: https://www.econbiz.de/10012763111
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What Hurts Most? G-3 Exchange Rate or Interest Rate Volatility
Reinhart, Carmen M.; Reinhart, Vincent R. - 2021
With many emerging market currencies tied to the U.S. dollar either implicitly or explicitly, movements in the exchange values of the currencies of major countries have the potential to influence the competitive position of many developing countries. According to some analysts, establishing...
Persistent link: https://www.econbiz.de/10013230967
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Do Sticky Prices Increase Real Exchange Rate Volatility at the Sector Level?
Crucini, Mario J.; Shintani, Mototsugu; Tsuruga, Takayuki - 2021
We introduce the real exchange rate volatility curve as a useful device to understand the role of price stickiness in … theory predicts that the real exchange rate volatility curve is a U-shaped function of the degree of price stickiness. Using … sector-level European real exchange rate data and frequency of price changes, we estimate the volatility curve. The results …
Persistent link: https://www.econbiz.de/10013311936
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Fixed Exchange Rates and Trade
Klein, Michael W.; Shambaugh, Jay - 2021
. While one branch of research consistently shows a small negative effect of exchange rate volatility on trade, another, more …
Persistent link: https://www.econbiz.de/10013237597
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Gravity, Scale and Exchange Rates
Anderson, James E. - 2013
We develop a structural gravity model that introduces scale effects in bilateral trade. Scale effects and incomplete passthrough give two channels through which exchange rates have real effects on trade patterns. Estimates from Canadian provincial trade data identify these effects through their...
Persistent link: https://www.econbiz.de/10013086673
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Gravity in FX R-Squared : Understanding the Factor Structure in Exchange Rates
Lustig, Hanno N. - 2017
We relate the risk characteristics of currencies to measures of physical, cultural, and institutional distance. The currencies of countries which are more distant from other countries are more exposed to systematic currency risk. This is due to a gravity effect in the factor structure of...
Persistent link: https://www.econbiz.de/10012948084
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What Determines Bilateral Trade Flows?
Baxter, Marianne - 2006
robust under certain methods and sample periods include exchange rate volatility, an index of sectoral similarity, and …
Persistent link: https://www.econbiz.de/10012780223
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Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?
Deardorff, Alan V. - 2021
This paper derives bilateral trade from two cases of the Heckscher-Ohlin Model, both also representing a variety of other models as well. First is frictionless trade, in which the absence of all impediments to trade in homogeneous products causes producers and consumers to be indifferent among...
Persistent link: https://www.econbiz.de/10013240629
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The Role of History in Bilateral Trade Flows
Eichengreen, Barry; Irwin, Douglas A. - 2021
This paper investigates the theory and evidence that history plays a role in shaping the direction of international trade. Because there are reasons to anticipate a positive correlation between the predominant direction of trade flows in the past and membership in preferential arrangements in...
Persistent link: https://www.econbiz.de/10013212584