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

30 Pages Posted: 15 Feb 2006

See all articles by Carmen M. Reinhart

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Date Written: November 1994

Abstract

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.

JEL Classification: F11, F14, F31, F32

Suggested Citation

Reinhart, Carmen M., Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries (November 1994). IMF Working Paper, Vol. , pp. 1-30, 1994. Available at SSRN: https://ssrn.com/abstract=883899

Carmen M. Reinhart (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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