Chapter

Trade Agreements, Exchange Rate Disagreements

Eduardo Fernández-Arias, Ugo Panizza and Ernesto Stein

in Monetary Unions and Hard Pegs

Published in print March 2004 | ISBN: 9780199271405
Published online August 2004 | e-ISBN: 9780191601200 | DOI: http://dx.doi.org/10.1093/0199271402.003.0009
 Trade Agreements, Exchange Rate Disagreements

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The negative effects on exports and FDI flows of an exchange rate misalignment are amplified when the misalignment is among countries that share a regional integration agreement. Such agreements strengthen the well-established relationship between real appreciation and currency crises. We conclude that coordination to achieve real-exchange-rate consistency within blocs is key to macro stability and, a fortiori, sustainable trade agreements.

Keywords: currency crises; exchange-rate agreements; exchange-rate and trade regimes; international compatibility; protectionism; trade agreements

Chapter.  7171 words.  Illustrated.

Subjects: Economic Systems

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