Purpose – To avoid aggregation bias by using trade data at bilateral level so that we can determine how sensitive are Britain’s inpayments and outpayments to the value of the British pound.Design/methodology/approach – The method is based on the bounds testing approach to cointegration and...

The traditional way of assessing the impact of currency depreciation on the trade balance has been to estimate the elasticity of trade volume to relative prices. To this end, most previous studies used aggregate trade data. To shy away from problems associated with using aggregate data, recent...

Conventional wisdom states that currency depreciation in oil-producing countries are contractionary because demand effects, limited by the prevalence of oil exports priced in dollars, are more than offset by adverse supply effects. Iran, however, has experienced a rapid increase in non-oil...

A country devalues its currency with an expectation that it will gain international competitiveness and increase its exports. However, the inflationary effects of devaluation could curtail its favourable effects unless nominal devaluation leads to real devaluation. In this paper, we consider the...