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

By employing the techniques of multivariate cointegration and error-correction models, we investigate the impact of the creation of the European Monetary System (EMS) on the exports of the four largest EU countries to each other. Our findings suggest that the impact of the EMS on bilateral intra-EU exports has been mixed. The EMS boosted bilateral trade in the cases of Germany's exports to Italy and Italy's exports to the UK. The EMS had a negative effect on the volume of exports between France and Germany in both directions. The EMS had no significant impact on export volumes in the majority of bilateral trade relationships examined.