Exchange Rate Volatility in Latin American and the Caribbean Region: Evidence from 1985 to 2005

Date
2009
Authors
Lizardo, Radhames
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Abstract
Using a total of 28 Latin American and Caribbean countries, this study finds a negative relationship between trade and exchange rate volatility. The econometric tool for this specific analysis is the widely used gravity model, in a panel data context. A similar condition is detected between inbound foreign direct investment and exchange rate volatility. The results of the study support the hypothesis that significant exchange rate volatility has a negative impact on the economies of the region and that achieving exchange rate stability should be a goal of policy makers in the context of Latin America and the Caribbean.
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Citation
Lizardo, R. (2009). Exchange rate volatility in Latin American and the Caribbean region: Evidence from 1985 to 2005. The Journal of International Trade & Economic Development, 18(2), 255-273. https://doi.org/10.1080/09638190902916501