This paper aims to quantify the impact of nominal exchange rate volatility on nominal trade flows with a particular focus on the Czech Republic. The paper shows that the magnitude of the impact differs when a dynamic model is used instead of static model.

A fixed exchange rate regime eliminates one degree of freedom in absorbing macroeconomic shocks. Therefore, there is a call for higher labor market flexibility in countries which are members of the monetary union or those which intend to join the monetary union. Focusing on the cross-country...