Financial Market Imperfections and the impact of exchange rate movements on exports

Konferenzbeitrag

This paper studies the role of financial market imperfections in the way countries' exports react to a currency depreciation. Using quarterly data for 27 developed and developing countries over the period 1990-2005, we show that the impact of a depreciation will be less positive - or even negative - for a country as: (i) firms borrow in foreign currency ; (ii) they are credit constrained ; (iii) they are specialized in industries that require more external capital; (iv) the depreciation's or devaluation's magnitude is large. This last result confirms the existence of a non-linear relationship between an exchange rate depreciation and a country's exports reaction when financial imperfections are observed. This work offers a new explanation for the consequences of recent currency crises in middle income countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Proceedings of the German Development Economics Conference, Berlin 2006 ; No. 3

Classification and Topics

• Classification: Wirtschaft ; International Finance Forecasting and Simulation: Models and Applications ; Current Account Adjustment; Short-term Capital Movements ; Trade: General
• Subject: International Trade ; Exchange Rate Movements ; Financial Development ; Financial Market Imperfections

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Berthou, Antoine ; Berman, Nicolas
• Event: Veröffentlichung
• (who): Verein für Socialpolitik, Ausschuss für Entwicklungsländer
• (where): Hannover
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/19831
• Last update: 10.03.2025, 11:44 AM CET