Exchange rate regimes and trade

Christopher Adam, David Cobham

    Research output: Contribution to journalArticle

    15 Citations (Scopus)

    Abstract

    A 'new version' of the gravity model is used to estimate the effect of a full range of de facto exchange rate regimes on bilateral trade. The results indicate that, while participation in a common currency union is typically strongly 'pro-trade', other exchange rate regimes which lower the exchange rate uncertainty and transactions costs associated with international trade are significantly more pro-trade than the default regime of a 'double float'. They suggest that the direct and indirect trade-creating effects of these regimes on uncertainty and transactions costs tend to outweigh the trade-diverting substitution effects. Tariff-equivalent monetary barriers associated with each exchange rate regime are also calculated. © 2007 Blackwell Publishing Ltd and The University of Manchester.

    Original languageEnglish
    Pages (from-to)44-63
    Number of pages20
    JournalManchester School
    Volume75
    Issue numberSUPPL. 1
    DOIs
    Publication statusPublished - Sep 2007

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