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date: 22 November 2019

Abstract and Keywords

The inextricable link between trade and exchange rates is a central feature of the international economy. As the cost of traversing international borders has decreased, as production of goods has become globalized, and as exchanging currencies has become easier, the effect of exchange rates on the price of goods and services has become more visible to the average citizen. Yet despite widespread acknowledgment of the links between trade and exchange rates, international political economy scholars have largely treated the two policy areas as distinct. And while the literature traversing these topics is not an empty set, it is substantially smaller than one might expect. This chapter highlights some of the work that has begun to explore the linkages between trade and exchange rate policies, focusing on policies such as optimal currency areas and preferential trade agreements. We also take stock of our state of knowledge and suggest fruitful avenues for research in the years ahead.

Keywords: international economy, exchange rates, optimal currency areas, preferential trade agreements, international trade

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