SFB 303 Discussion Paper No. B - 282
Author: Sapir, André, Khalid Sekkat and Axel A. Weber
Title: The Impact of Exchange Rate Fluctuations on European Community Trade
Abstract: The impact of exchange rate fluctuations on international trade has
long been a major concern for policy makers. This is particularly the case
in Europe, where countries trade extensively with each other. The crisis
that began in the Summer of 1992 generated increased exchange rate
fluctuations and, therefore, renewed concerns about consequences for trade
inside the Community. This report has attempted to infer the likely impact
of the exchange rate crisis on trade flows inside and outside the Community.
The analysis indicates the need to distinguish between short-term
oscillations (i.e. volatility) and medium-term fluctuations (i.e.
misalignment). We find that the recent ERM crisis is likely to have had some
negative impact on trade within the region, but this impact is probably
minor in size.
Keywords: exchange rates, volatility, misalignments, trade, EMS
JEL-Classification-Number: F12, F31, L16
Creation-Date: Revised June 1994
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