Strong euro less harmful for developing trade
The euro's strength has a weaker effect on the competitiveness of euro-area exports when the destination is a developing country, finds new research from the European Central Bank.
The paper shows that the negative impact of real exchange rate fluctuations on exports is reduced when:
· the destination has poor quality institutions;
· the country is more distant; and
· the efficiency of customs is low both in the importing and exporting countries.
The paper looks at a sample of OECD exporting
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