The dominant currency paradigm (DCP) predicts negligible effects of exchange rate changes on export volumes through the expenditure-switching channel (Gopinath et al., 2020). However, exports can still adjust other supply-side channels. With bilateral trade data at HS2-product level, panel fixed-effects regressions and an instrumental variables (IV) approach, this paper presents several novel f...

This paper develops a model of the circumstances under which it is beneficial to participate in a currency area. The proposed two-country monetary model of trade with nominal rigidities encompasses the real and monetary arguments suggested by the optimum currency area literature: correlation of real and monetary shocks, international factor mobility, fiscal adjustment, openness, difference in n...

Recent emerging market crises have emphasized the fluctuating character of trade’s reaction after financial crises, in contradiction with the apparently simple theoretical impact of such events on trade, which is essentially described by the well-known J-curve mechanism.. We use a gravity-like equation to assess the impact of these events on bilateral sectoral trade and reveal the elements whic...

the objective of this study is to provide a partial equilibrium analysis of the effects of tariff and exchange rate policy on the net exports with the particular emphasis on the selected economic sectors. the eight economic sectors in the model are agriculture; food, beverages and tobacco; textiles; wood; chemicals; construction; paper and miselaneous which contains metallic and non merallic pr...

Principal-agent problems between corporate parent and subsidiary operations are frequently exacerbated in international settings by exchange rate fluctuations between the foreign subsidiary’s local currency and the multinational corporation’s (“MNC”) reference currency. This article develops a conceptual solution to resolve this international control conundrum using an Economic Value Added (“EV...

In 1950, Orcutt argued that ‘trade flows respond to changes in nominal exchange rate faster than relative prices’. Subsequently empirical studies have tested this hypothesis and found mixed results. The experience of Sri Lanka, where it has been encountering a relentless fall is the share its exports global trade during past decade, provides an ample motivation test ascertain which policy instr...

This study investigates the real effects of exchange rate changes on exports with three key features; pricing in a dominant currency like US dollar, imported intermediary use production, and dependent major demanded countries. We test longitudinal rates using data set both gross value-added bilateral exports. The finding distinguishes positive panel effect dollar depreciation due to liquidity f...

We quantify the causal link between exchange rate movements and sovereign risk of 16 major emerging market economies (EMEs) by means structural vector autoregressive models (SVARs) conditional on data from 10/2004 through 12/2016. apply a novel data-based identification approach shocks that allows to account for complex interrelations within triad rates, risks interest rates. The direction size...

This paper studies the impact of exchange rate fluctuations on exported product quality. Existing stress link between home country depreciation and increased access to exports via a relative price effect. Our focus in this study is complementary effect an import currency appreciation (i.e., domestic appreciates sourcing country's currency). main finding that firms upgrade their export quality r...

Abstract Can currency competition affect central banks’ control of interest rates and prices? Yes, it can. In a two-currency world with competing cash (material or digital), the growth rate cryptocurrency sets an upper bound on nominal attainable inflation rate, if government is to retain its role as medium exchange. any case, has full rate. With interest-bearing digital currency, equilibria in...