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Issue:

Business

 

Written by:

Ruth G

 

Date added:

March 13, 2015

 

Level:

University

 

Grade:

A

 

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4 / 1027

 

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Geoff Pugh, Staffordshire University Business School, Leek Road, Stoke-on-Trent, ST4 2DF, UK. 0044 (0) 1782 4902; geoff@plainfigures.com . Bruno Coric, University of Split, Faculty of Economics, Department of Economics, Matice Hrvatske 31, 21000 Split, Croatia. [pic] |Page 3 | 2 1 Introduction Since the onset of generalized floating, there has been extensive theoretical and empirical investigation of the effects of exchange rate variability on international trade...
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This issue has also been prominent in policy debate. Yet, so far, neither theoretical nor empirical work has converged towards consensus. There is a consensus that exchange rate movements cannot be anticipated and, hence, create uncertainty in international trade. Since Meese and Rogoff (1983), the accepted view is that exchange rates essentially follow a random walk, implying that changes in exchange rates in the next period are unpredictable, and their “fundamental” determinants continue to elude empirical research...
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