The Impact of the Exchange Rate Regime on Exports: Evidence from Bilateral Exports in the European Monetary System

In this paper, we investigated the impact of the creation of the European Monetary System (EMS) on the exports of the four largest EU countries (France, Germany, Italy and UK) to each other. Our findings suggest that the EMS boosted bilateral trade in the cases of Germany 's exports to Italy and Italy 's exports to the UK and influenced negatively the volume of exports between France and Germany. The EMS had no significant impact on export volumes in the rest of bilateral trade relationships examined. Additionally, we found that exchange rate volatility more often than not had an insignificant effect on the volume of intra-EU exports.