Article ID Journal Published Year Pages File Type
10479488 Journal of Policy Modeling 2005 10 Pages PDF
Abstract
This paper investigates dynamic interrelations between exchange rate uncertainty, trade volumes, and price competitiveness, using sectoral data on UK manufacturing exports. The results suggest that when there is an unexpected fluctuation in exchange rates, exporters adjust to the change in the level of risk by increasing export prices and by decreasing trade volumes, but prefer to directly reduce trade volumes rather than to increase prices. The extent of each response depends, however, on the nature of the market in which the goods are traded. This evidence implies that if the UK adopts the euro, there will be a positive impact on the country's export trade and economic performance.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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