Date of Award

Spring 2013

Document Type

Thesis

Degree Name

Bachelor of Sci/Business Admin

Department

Economics

Abstract

This paper looks at the relationship between trade openness and an exchange rate volatility index called exchange market pressure. The theory behind the paper is that increasing trade flows between nations should reduce economic volatility, as it allows for the correct allocation of goods and services across borders. The results show a negative relationship between an increase in trade openness and volatility as measured by exchange market pressures. The empirical estimate is based on 20 OECD nations from 1992 to 2007. Although, trade shows some impact on volatility, most instability arises from systematic risks that are felt globally.

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