Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153354
Authors: 
Berthou, Antoine
Year of Publication: 
2008
Series/Report no.: 
ECB Working Paper 920
Abstract: 
The reaction of exports to real exchange rate movements can differ according to the nature of the destination country. We derive and estimate a gravity equation for 20 OECD exporting countries and 52 developed and developing importing countries. We test how trade costs dampen the effect of real exchange rate movements on bilateral exports, and show that the elasticity on the real exchange rate is reduced when (i) the destination country has a low quality of institutions, (ii) this country is more distant, and (iii) the efficiency of customs is low in both the importing and exporting countries. These results are highly consistent with the existence of an hysteresis effect of real exchange rate movements on trade, as suggested by Baldwin and Krugman (1989).
Subjects: 
Exchange Rate Movements
institutions
Trade
JEL: 
F10
F32
D73
Document Type: 
Working Paper

Files in This Item:
File
Size
859.48 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.