Are exchange rates less important for trade in a more globalized world? Evidence for the new EU members

Determinants of the Duration of Economic Recoveries: The Role of ’Too Much Finance’

“…Consequently, the positive effect of weaker domestic currency, via the 'trade channel', might not materialize quickly enough to stimulate the economic recovery (i.e., it could materialize only once the economy had already recovered). Furthermore, there is some empirical evidence that the 'trade channel' of the exchange rates might be weakening with the increasing globalization of the world economy: Fisera and Horvath (2022) found that the growing participation in the Global Value Chains (GVCs) limits the positive effect of a weaker domestic currency via the 'trade channel'.…”

Exchange rate misalignments, growth, and institutions

“…An intuitive description of the method is provided by De Vos et al (2015). 10 Let us note that we obtained the initial values from 50 burn-in iterations and the confidence intervals were obtained directly from the bootstrap replications. Because our data are from well-identified cross-sectional units, and our time-sample is relatively small, we used resampling that allowed us to account for the contemporaneous cross-sectional dependence.…”

“…We were, in fact, able to obtain even opposite coefficient signs in some of our regressions presented in the next section -just by a small changes in the number of lags used as instruments, and the specification tests did not provide us with almost any guidance to select which of the results are more relevant than others. Let us note that the results from our GMM experiments are available upon request, although not worth a red cent 10. The bootstrap corrected fixed effect model was estimated in Stata, using the xtbfce command (De Vos,Everaert, and Ruyssen, 2015).…”