We confront the notion that flexible exchange rates insulate countries from external disturbances with new evidence for the euro area (EA) and 20 of its neighbors. Using high-frequency data, we first establish that countries with flexible exchange rates ("floats") let their currencies depreciate...

Geopolitical fragmentation triggers complex dynamics in international trade. This paper examines the effects of sanctions through the lens of a stylized model and the empirical analysis of Türkiye’s exports to Russia in the aftermath of Western measures imposed on Russia following its...