When we export things we get money in other currency or ours?
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The effects are many; a synthesis would be the following:
1 what matters is the real exchange rate, and not the nominal one (e=EP1/P2, where e=real exchange rate, E=nominal exchange rate, P1=domestic prices, P2=foreign prices); this is because the real exchange rate represents the effective international purchasing power of the country;
2 for the economy as a whole, exports are easier (abroad the domestic products are relatively cheaper) while imports are more difficult (foreign products are relatively more expensive);
3 the effect on the trade balance (export-import of goods and services) is not automatic, but depends on the respect of the well know Marshall-Lerner Condition; if this condition holds, the trade balance will improve
4 if in addition to the current exchange rate are also considered the expectations on the same, then there will be some effects even on the gap between domestic and foreign interest rates (you should refer to the theories of the Uncovered Interest Rate Parity and Covered Interest Rate Parity)
There are many references in the economic literature; for simplicity you can refer to:
1 what matters is the real exchange rate, and not the nominal one (e=EP1/P2, where e=real exchange rate, E=nominal exchange rate, P1=domestic prices, P2=foreign prices); this is because the real exchange rate represents the effective international purchasing power of the country;
2 for the economy as a whole, exports are easier (abroad the domestic products are relatively cheaper) while imports are more difficult (foreign products are relatively more expensive);
3 the effect on the trade balance (export-import of goods and services) is not automatic, but depends on the respect of the well know Marshall-Lerner Condition; if this condition holds, the trade balance will improve
4 if in addition to the current exchange rate are also considered the expectations on the same, then there will be some effects even on the gap between domestic and foreign interest rates (you should refer to the theories of the Uncovered Interest Rate Parity and Covered Interest Rate Parity)
There are many references in the economic literature; for simplicity you can refer to:
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