Flexible exchange rates and international trade: An empirical investigation of bilateral flows
- 1 September 1986
- journal article
- research article
- Published by Taylor & Francis in The International Trade Journal
- Vol. 1 (1) , 27-46
- https://doi.org/10.1080/08853908608523602
Abstract
This paper investigates the alleged adverse effect of floating exchange rates on international trade. A simple model is constructed to test the relationship between exchange rate variability and bilateral trade flows between the United States and three of its major trading partners: Canada, Japan and Germany. Using data from 1960 to 1983 to encompass both “stable” and floating rate regimes, it is shown that while exchange rate variability is considerably higher in the floating period, there is no evidence that this greater variability has had a negative impact on trade flows.Keywords
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