Abstract
This paper investigates dynamic interrelations between exchange rate uncertainty, international trade, and trading competitiveness in prices, using UK data. The empirical results derived from vector autoregressive (VAR) models show that a shock to exchange rate volatility negatively affects trade volumes, and such negative effects are greater than the effects on trade price levels.
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JEL Classification Numbers: F14, F31, F41
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Cheong, C., Mehari, T. & Williams, L.V. Dynamic Links Between Unexpected Exchange Rate Variation, Prices, and International Trade. Open Econ Rev 17, 221–233 (2006). https://doi.org/10.1007/s11079-006-4745-9
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DOI: https://doi.org/10.1007/s11079-006-4745-9