Alexander, Gwen

Lowry, Faculty Advisor, Pam

Digital Commons @ Illinois Wesleyan University

Illinois Wesleyan UniversityDigital Commons @ IWUJohn Wesley Powell Student ResearchConference 1996, 7th Annual JWP ConferenceApr 13th, 10:30 AM - 10:45 AMExchange Rate Variability and Its Effect on Trade: ACase Study of the CFA Franc ZoneGwen AlexanderIllinois Wesleyan UniversityPam Lowry, Faculty AdvisorIllinois Wesleyan UniversityFollow this and additional works at: http://digitalcommons.iwu.edu/jwprcThis Event is brought to you for free and open access by The Ames Library, the Andrew W. Mellon Center for Curricular and FacultyDevelopment, the Office of the Provost and the Office of the President. It has been accepted for inclusion in Digital Commons @ IWU bythe faculty at Illinois Wesleyan University. For more information, please contact digitalcommons@iwu.edu.©Copyright is owned by the author of this document.Gwen Alexander and Pam Lowry, Faculty Advisor, "Exchange Rate Variability and Its Effect on Trade: A Case Study of theCFA Franc Zone" (April 13, 1996). John Wesley Powell Student Research Conference. Paper 5.http://digitalcommons.iwu.edu/jwprc/1996/oralpres2/5THE JOHN WESLEY POWELL STUDENT RESEARCH CONFERENCE· APRIL 1996 Oral Presentation 2.1 EXCHANGE RATE VARIABILITY AND ITS EFFECT ON TRADE: A CASE STUDY OF THE CFA FRANC ZONE Gwen Alexander and Pam Lowry*, Department of Economics, lWU The volatility of a nation's exchange rate relative to its trading partners creates a risk for merchants. If we assume risk-averse merchants, volatility should decrease the volume of international trade. This paper addresses the effect of exchange rate variability over a period of 20 years on the imports of the CF A Franc Zone, a monetary union in West and Central Mrica. Using the percent change in the Real Exchange Rate index as a measure of variability, a generalized difference equation shows that exchange rate variability does negatively effect the imports of the Franc Zone. 

Exchange Rate Variability and Its Effect on Trade: A Case Study of the CFA Franc Zone

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Exchange Rate Variability and Its Effect on Trade: A Case Study of the CFA Franc Zone

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