IMF Working Papers Volume 2017 Issue 058: Exchange Rates and Trade: A Disconnect? (2017)

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Exchange Rates and Trade: A Disconnect?

Author:

Mr. Daniel Leigh

Mr. Daniel Leigh
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Weicheng Lian

Weicheng Liannull

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Mr. Marcos Poplawski Ribeiro

Mr. Marcos Poplawski Ribeiro
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https://orcid.org/0000-0003-0998-7238

Rachel Szymanski

Rachel Szymanski
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Viktor Tsyrennikov

Viktor Tsyrennikovnull

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, and

Hong Yang

Hong Yang
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Series:: IMF Working Papers

Volume/Issue:: Volume 2017: Issue 058

Publication Date:: 15 Mar 2017

DOI:: https://doi.org/10.5089/9781475587494.001

ISBN:: 9781475587494

ISSN:: 1018-5941

Pages:: 52

Keywords:: WP; trade elasticity; real GDP; producer price index; exchange rate disconnect; global trade; exchange rates and trade; price elasticity; depreciation episode; trade volume; exchange rate-trade; trade equation; export price response; Exchange rates; Export prices; Exports; Depreciation; Exchange rate pass-through; Global; Europe; Asia and Pacific; Africa

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2017: Issue 058

Language:: English

Publication Date:: 15 Mar 2017

DOI:: https://doi.org/10.5089/9781475587494.001

ISBN:: 9781475587494

ISSN:: 1018-5941

Pages:: 52

Keywords:: WP; trade elasticity; real GDP; producer price index; exchange rate disconnect; global trade; exchange rates and trade; price elasticity; depreciation episode; trade volume; exchange rate-trade; trade equation; export price response; Exchange rates; Export prices; Exports; Depreciation; Exchange rate pass-through; Global; Europe; Asia and Pacific; Africa

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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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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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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