The Effect of Exchange Rates On Export Market Shares

Abstract

The changes in the exchange rates of the major exporters of manufactures between 1967 and 1971 were followed by substantial changes in their export performance measured against trends before the realignment, indicating that the devaluations and revaluations were effective, contrary to some preliminary assessments. Changes in relative prices are a good explanation of the previous trends, as well as the basic reason for expecting effects from exchange rate changes. The results under fixed rates cannot therefore be applied under floating rates as these reduce, if they do not eliminate, relative price changes converted to a common currency.