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This paper examines the relationship between fixed exchange rate arrangements and trade using a gravity model of international trade together with bilateral trade data from 24 countries from the Caribbean and Latin America for the period 1960-2001. The analysis indicates that a credible fixed peg has a positive impact on the value of bilateral trade. Moreover, the positive impact on trade is more pronounced with a stricter definition of the fixed peg or a longer duration of the peg. This supports the argument that the credibility of an exchange rate peg is an important element to determine bilateral trade. There is, however, no evidence to suggest that a currency union provides additional benefits.

Foreign exchange administration --- International trade. --- External trade --- Foreign commerce --- Foreign trade --- Global commerce --- Global trade --- Trade, International --- World trade --- Commerce --- International economic relations --- Non-traded goods --- Foreign exchange --- Exports and Imports --- Foreign Exchange --- Money and Monetary Policy --- Economic Integration --- International Monetary Arrangements and Institutions --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Financial Aspects of Economic Integration --- Trade Policy --- International Trade Organizations --- Currency --- International economics --- Monetary economics --- Conventional peg --- Exchange rate arrangements --- Currencies --- Monetary unions --- Plurilateral trade --- Money --- Economic integration --- International trade --- United States

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This paper describes the functions, policies, and operations of the IMF. The IMF is an independent international organization, and is a cooperative of 185 member countries, whose objective is to promote world economic stability and growth. The member countries are the shareholders of the cooperative, providing the capital of the IMF through quota subscriptions. In return, the IMF provides its members with macroeconomic policy advice, financing in times of balance-of-payments need, and technical assistance and training to improve national economic management.

Economic policy --- Balance of payments --- Special drawing rights --- Technical assistance --- Finance --- Business & Economics --- International Finance --- Assistance, Technical --- Assistance, Technological --- Technological assistance --- Economic assistance --- International reserve units --- IRUs (International reserve units) --- Paper gold --- SDRs (Special drawing rights) --- International finance --- International liquidity --- Current account balance (International trade) --- International payments, Balance of --- Foreign exchange --- Terms of trade --- Balance of trade --- Economic nationalism --- Economic planning --- National planning --- State planning --- Economics --- Planning --- National security --- Social policy --- Banks and Banking --- Exports and Imports --- Financial Risk Management --- Money and Monetary Policy --- Social Services and Welfare --- Government Policy --- Provision and Effects of Welfare Program --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Current Account Adjustment --- Short-term Capital Movements --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Social welfare & social services --- International economics --- Monetary economics --- Data capture & analysis --- Poverty reduction strategy --- Debt relief --- Balance of payments need --- Credit --- Poverty reduction --- Poverty --- Asset and liability management --- Money --- Debts, External --- Financial services industry --- United States