Arbeitspapier
Tariffs and the exchange rate: Evidence from Twitter
This paper examines the conjecture that an increase in tariffs in a flexible exchange rate regime leads to the appreciation of the local currency. We focus on the reaction of the exchange rate market to tweets by US President Donald Trump regarding possible tariff increases on Canadian and Mexican goods. The anticipation of trade restrictions leads to the US dollar appreciating by 0.023% and 0.051% vis-à-vis the Canadian dollar and Mexican peso within five minutes of the tweet, and comparable percentages for forward rates up to five years ahead. Exchange rate appreciation may mitigate the expenditure-switching intended by the protectionist policy.
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Canada Staff Working Paper ; No. 2021-36
- Classification
-
Wirtschaft
Trade Policy; International Trade Organizations
Foreign Exchange
- Subject
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Exchange rates
Trade integration
- Event
-
Geistige Schöpfung
- (who)
-
Matveev, Dmitry
Ruge-Murcia, Francisco Javier
- Event
-
Veröffentlichung
- (who)
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Bank of Canada
- (where)
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Ottawa
- (when)
-
2021
- DOI
-
doi:10.34989/swp-2021-36
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Matveev, Dmitry
- Ruge-Murcia, Francisco Javier
- Bank of Canada
Time of origin
- 2021
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