Floating Exchange Rates Impact On International Trading

In View of the continuation of substantial movements in exchange rate relationships among major currencies, the recent increase in protectionist pressures, and the disappointing performance of world trade, renewed concern has been expressed about the possible adverse effects of exchange rate variability on trade. Against the background of this concern, the following decision was reached at the ministerial meeting of the General Agreement of Tariffs and Trade (GATT) in November 1982.

These essays review recent advances in exchange rate analysis and new empirical analysis of the behavior of exchange rates and their effects on international trade and the U.S. economy. The first section deals with the determination of exchange rates and their alleged volatility and disequilibrium levels. The second section concerns the effects of flexible exchange rates on international trade, and the third treats the macroeconomic linkages between economies and international influences on the U.S. economy. ISBN 0-88410-948-8 : $39.95.

Analyzes developments in the international monetary system since 1973, with anew added epilogue.

Master's Thesis from the year 2018 in the subject Economics - International Economic Relations, grade: A, National University of Ireland, Maynooth (Department of Economics, Finance and Accounting), course: MSc Economic and Financial Risk Analysis, language: English, abstract: The purpose of this thesis is to examine the effect of real exchange rate volatility between the Canadian and US dollars on real exports from Canada to US. The study uses quarterly data from 1960-2017. The GARCH (1, 1) is used to model exchange rate volatility. After finding the variables are non-stationary with no co-integration, a VAR (Vector Auto regression) model is used to investigate the short-run relationship in the variables using Granger causality, impulse response functions and variance decomposition estimates. The results reveal that the effect of exchange rate volatility is of mixed signs with coefficients that are not statistically significant. The thesis is divided into 7 chapters; chapter 2 gives an overview of important literature and contributions by researchers over the years specifically covering the relationship between exchange rate volatility and trade, exchange rate regimes, exchange rate target zones and inflation targeting. Chapter 3 presents the model and data used, definitions of the variables and the predictions of the model. Chapter 4 gives a theoretical and econometric overview of the unit root and co-integration tests. Chapter 5 gives the data output of the empirical results and discussions of test results. This output is presented using graphs and tables. Chapter 6 is a presentation of the limitations of the model and possible areas of improvement. Lastly, chapter 7 concludes and gives policy recommendations moving forward. Exchange rates are a key player in any economy that is engaging in international trade. A stable monetary policy system and financial sector play a key role in ensuring the exchange rate stability of the currency of a country. Firms and traders rely on prevailing exchange rates to forecast amounts to produce, import and export; thus are very much affected by the exchange rate volatility. In addition to this, there is a currency conversion cost in international trade. Traders use a number of products in financial markets to hedge against currency fluctuations; these include among others forwards contracts. This is especially true for short-term hedging than long-term hedging.

Originally published in 1996. This study looks at the impact of exchange rate fluctuation on the pricing practices of foreign industries that import into the United States market. It presents several studies of the pass-through behaviour of over 100 disaggregated commodity groups with bi-lateral exchange rates. The book presents analysis of specific competitors and their individual pricing responses to exchange rate changes, adding significantly to pricing theory as well as being useful for marketers in predicting business responses.

Contrary to the arguments of several scholars, we have failed to find either a conclusive theoretical case or clear empirical evidence of an effect, harmful or otherwise, of exchange rate variability (as measured by either short-term volatility or long-run misalignment) on overall levels of international trade. In this paper, after reviewing the theories and evidence on this issue, we go on to consider the impact of exchange rate variability on direct foreign investment. We summarize and amplify upon the scant theoretical literature of this issue, and proceed to test U.S. data for the presence of such an impact. We find none.