Does The Exchange Rate Regime Affect Export Volume? Evidence From Bilateral Exportsin US–UK Trade: 1900–98

In: The Manchester School, Volume 71, Issue 1, p. 51-64

Abstract

By utilizing the techniques of multivariate cointegration and error correctionmodels, we investigate the impact of the different exchange rate regimes that spannedthe twentieth century on the bilateral exports between the UK and the USA over thelast 99 years. Our results support two conclusions. First, fixed exchange rate regimesand managed float exchange rate regimes are equally conducive to trade. Second, freely floating exchange rate regimes are more conducive to trade than fixed exchange rateregimes.