Exchange Rates and Trade: A Disconnect?
Mr.Daniel Leigh · Weicheng Lian · Marcos Poplawski-Ribeiro · Rachel Szymanski · Viktor Tsyrennikov · Hong Yang
Mar 2017 · International Monetary Fund
Ebook
52
Pages
About this ebook
We examine the stability and strength of the relationship between exchange rates and trade over time using three alternative approaches, mitigating the endogeneity of the relation. We find that both exchange rate pass-through and the price elasticity of trade volumes are largely stable over time. Economic slack and financial conditions affect the relationship, but there is limited evidence that participation in global value chains has significantly changed the exchange rate–trade relationship over time.
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