Effect of Ukraine’s exchange rate devaluation on trade with the EU
Keywords:trade liberalization, the Deep and Comprehensive Free Trade Area, economic growth, currency regulation, currency exchange rate regime, exports, preferential trade agreements.
This article examines the relationship between exchange rate changes and export development within the context of the free trade agreement (DCFTA) between Ukraine and the EU. It argues that the effects of the exchange rate may be a greater influence than the FTA regime itself. After examining current theory and definitions, the article looks at difference measures of exchange rate, nominal, variations of the real exchange, exchange rate volatility and equilibrium exchange rate to identify causal links to Ukraine’s trade before and after the DCFTA. It shows that there is a positive causal relationship between the real exchange rate and exports with devaluations during implementation had a significant impact on Ukraine’s exports, and this effect is greatest on those products that benefited from better access under the FTA.
Ilychok, B., & Trevoho, O.(2016). Exchange Rate of Ukrainian Currency – Trends And Potential Changes. Journal of Economics, Entrepreneurship, Management. (Vol. 3), 2 [in English]. https://doi.org/10.23939/eem2016.02.031
Glushchenko, S.,&Tkalenko, S. (2016). Threats And Benefits of Exchange Rate Regimes for Ukraine in Terms of European Integration. Baltic Journal of Economic Studies. (Vol. 2), 2 [in English]. https://doi.org/10.30525/2256-0742/2016-2-2-32-39
Bereslavska, O. (2015). Devaluation shocks and their consequences for Ukraine's economy.Economy and Forecasting. Issue 4, 29-42 [in English]. https://doi.org/10.15407/eip2015.04.029
Piontkivsky,R. (1999).Exchange Rate Effects On The Current Account (Would The Devaluation Improve The Ukrainian Current Account). Kyiv: The National University of Kyiv-Mohyla Academy [in English].
Linnik,O. A. (2015). Formation of external state debt of Ukraine in 2010–2014: Causes and consequences. Regional Economics, 1, 104-114 [in English].
Vorobeva, K. O. (2010).Investigation of the influence of the high and low exchange rate on the economy of the country. Bulletin of the Academy of Customs Service of Ukraine, 1, 141-147 [in English].
Didur, S. V., Glukhova, V. I., & Yeliseeva, O. Y. (2016). The Analysis of Tendencies of Fluctuation of theExchange Rate in the Conditions of Crisis in Ukraine. Economy and Society. Issue 5 [in English].
Gorraya, L. O. (2016). The Influence of Volatility of The Exchange Rate on Selectedindicatorsof Financial And Economic Development of Ukraine. Economic Sciences Bulletin of the Khmelnytsky National University, 4. (Vol. 1) [in English].
Micco, A., Luis O., G.,Stein, E. &Ordoòez, G. (2003). The Currency Union Effect on Trade: Early Evidence from EMU in Economic Policy.(Vol.18). 315-356[in English]. https://doi.org/10.1111/1468-0327.00109_1
Bun, M. J. &Klaassen, F. J. (2007). The Euro Effect on Trade is not as Large as Commonly Thought. Oxford Bulletin of Economics and Statistics, 69, 473-496 [in English]. https://doi.org/10.1111/j.1468-0084.2007.00448.x
Johnson, Omotunde (1976). The exchange rate as an Instrument if Policy in a Developing Country. IMF Staff Papers [in English].
Kreinin, M. (1977). The Effect of Exchange Rate Changes on the Prices and Volume of Foreign Trade. IMF Staff Papers. (Vol. 24). Issue 2, 297-329 [in English]. https://doi.org/10.2307/3866575
Bhagwat, A., &Onitsuka,Y.(1974). Export-Import Responses to Devaluation. IMF Staff Papers[in English]. https://doi.org/10.2307/3866471
Ridler, D. & Yandle, C. (1972). A Simplified Method for Analyzing the Effects of Exchange Rate Changes on Exports of a Primary Commodity. IMF Staff Papers [in English]. https://doi.org/10.2307/3866417
Little, I. M. D.,Cooper, R., Corden, W. M.,& Rajapatisani, S. (1993).Boom, Crisis and Adjustment: the Macroeconomic Experience of Developing Countries. Oxford University Press [in English].
Fleissig, A.,&Grennes, T. (1994).The Real Exchange Rate Conundrum: The Case of Central America. World Development.(Vol. 22) [in English]. https://doi.org/10.1016/0305-750X(94)90172-4
Sadoulet, E., &De Janvry, A. (1995). Quantitative Development Analysis. John Hopkins University Press [in English].
DE Vries, M. G. (1968). Exchange Depreciation in Developing Countries. IMF Staff Papers [in English].
Edwards, S. (1988). Exchange Rate Misalignment in Developing Countries. John Hopkins University Press [in English].
Sadoulet, E., & Janvry, A. (1995). Quantitative Development Policy Analysis. Johns Hopkins University Press [in English].
Imf. Finance and Development(1995). IMF March [in English].
The world bank operations UNIT (1992). Trade Policy Reforms under Adjustment Programs. World Bank[in English].
Ruda, Y.,&Repko, M. (2017).The Term of Valeria Hontareva: Monetary Policy in the Times of Unprecedented Challenges. Voxukraine [in English].
Khemani, R. S., & Shapiro, D. M. (1993). Glossary of Industrial Organisation Economics and Competition Law. OECD [in English].
Goldstein, M., & Khan, M. S. (1985). Income and price effects in foreign trade in Handbook of International Economics.(Vol.2), 1041-1105 [in English]. https://doi.org/10.1016/S1573-4404(85)02011-1
Khan, M., & Ostry, J. (1992). Real Exchange Rate Responses to External and Policy Shocks. World Development, September [in English].