pera9807 - The Impact of Exchange Rate Regimes on the...

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The Impact of Exchange Rate Regimes on the Stability of Trade Policy Staff Working Paper ERAD-98-07 July, 1998 World Trade Organization  Economic Research and Analysis Division Zdenek Drabek: WTO Josef C. Brada: Arizona State University Manuscript date:  July, 1998 Exchange Rate Regimes and the Stability of Trade Policy in  Transition Economies
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The Impact of Exchange Rate Regimes on the Stability of Trade Policy 2 Disclaimer : This is a working paper, and hence it represents research in progress. This paper represents the opinions of individual staff members or visiting scholars, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the authors. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Analysis Division, World Trade Organization, rue de Lausanne 154, CH-1211 Genéve 21, Switzerland. Please request papers by number and title.
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The Impact of Exchange Rate Regimes on the Stability of Trade Policy Exchange Rate Regimes and the Stability of Trade Policy in Transition Economies 1 Zdenek Drabek World Trade Organization Geneva, Switzerland Josef C. Brada Arizona State University Tempe, AZ 85287-3806 Running Head: Exchange Regimes and Trade Policy Proofs to: Dr. Zdenek Drabek World Trade Organization Centre William Reppard Rue de Laussane 154 CH-1211 Geneve 21 Switzerland FAX: 41 22 739 5762 e-mail: zdenek.drabek@wto.org ABSTRACT This paper examines the interplay between exchange rate regimes and policies and commercial policy in six transition economies. In all these economies the rate of protection afforded domestic industry by the exchange rate has been eroded by high rates of inflation and insufficient growth in productivity. As a result, there has been pressure on governments to increase trade barriers and each country examined has had recourse to various means of restricting imports. We argue that more flexible management of the nominal exchange rate would be a preferable way of dealing with the real appreciation of these countries’ currencies. Key Words: exchange rates, trade policy, transition economies JEL Classification Nos. [P33]; [F13]; [F33]
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The Impact of Exchange Rate Regimes on the Stability of Trade Policy 1. Introduction. The effectiveness of different exchange rate system in promoting competitiveness in international trade and their impact on macroeconomic stability have been discussed by Wickham (1985), Sachs (1996), Frenkel (1996) and others as part of an ongoing scholarly debate. Most recently, this discussion has focussed on the appropriate choice of exchange rate regime for transition economies. In this paper, we consider an aspect of exchange rate policies that has so far escaped much attention in the literature, the impact of different exchange rate regimes on the stability of trade policy. Stable trade policies are extremely important both for
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pera9807 - The Impact of Exchange Rate Regimes on the...

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