Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19831
Authors: 
Berthou, Antoine
Berman, Nicolas
Year of Publication: 
2006
Series/Report no.: 
Proceedings of the German Development Economics Conference, Berlin 2006 / Verein für Socialpolitik, Research Committee Development Economics 3
Abstract: 
This paper studies the role of financial market imperfections in the way countries' exports react to a currency depreciation. Using quarterly data for 27 developed and developing countries over the period 1990-2005, we show that the impact of a depreciation will be less positive - or even negative - for a country as: (i) firms borrow in foreign currency ; (ii) they are credit constrained ; (iii) they are specialized in industries that require more external capital; (iv) the depreciation's or devaluation's magnitude is large. This last result confirms the existence of a non-linear relationship between an exchange rate depreciation and a country's exports reaction when financial imperfections are observed. This work offers a new explanation for the consequences of recent currency crises in middle income countries.
Subjects: 
International Trade
Exchange Rate Movements
Financial Development
Financial Market Imperfections
JEL: 
F37
F32
F10
Document Type: 
Conference Paper

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