Devaluation, Relative Prices, and International Trade: Evidence From Developing Countries

Author/Editor:

Carmen Reinhart

Publication Date:

November 1, 1994

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Devaluation is an integral part of adjustment in many developing countries, particularly relied upon by countries facing large external imbalances. A devaluation can only reduce trade imbalances if it translates to a real devaluation and if trade flows respond to relative prices in a significant and predictable manner. However, a recent strand in the empirical trade literature has questioned the existence of a stable relationship between trade flows and its traditional determinants. This paper re-examines the relationship between relative prices and imports and exports in a sample of 12 developing countries.

Series:

Working Paper No. 1994/140

Subject:

Exports Imports International trade National accounts Personal income Price elasticity Prices Trade balance

Notes:

Examines on the relationship between relative prices and imports and exports in a sample of 12 developing countries. Also published in Staff Papers, Vol. 42, No. 2, June 1995.

English

Publication Date:

November 1, 1994

ISBN/ISSN:

9781451928679/1018-5941

Stock No:

WPIEA1401994

Pages:

30

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