The Effect of Trade Openness on Exchange Rate: A Meta-regression Analysis
Trade openness remains one of the key drivers of exchange rate fluctuations in both the long-run and short-run. The relationship between trade openness and exchange rate has long been explained in many theoretical and empirical studies. Nevertheless, in the empirical literature, the results on the trade openness and exchange rate nexus were mixed and divergent; while most studies revealed a negative relationship between trade openness and exchange rate, some found a positive relationship and very few even demonstrated a null relationship.