Import on Swedish Imports and Exports: In Term of the Swedish Krona-Euro Exchange Rate
Briefly introduce the changes in the Swedish Krone from the fixed exchange rate time to the present (2018), using a simple regression model to interpret the relationship between import+export over GDP and the Swedish krona exchange rate (for the euro, before the 2002 German Mark) and other control variables （create a dummy for Euro before and after）. Analyze the impact of variables such as exchange rates on their imports and exports. The exchange rate may use REER. Others see attachments and future contact
Import on Swedish Imports and Exports: In Term of the Swedish Krona-Euro Exchange Rate
The exchange rate is a very important variable in macro-economics. As long as it involves an open economy, exchange rate has important influence on its import and export, even economic development. That is why exchange rate has been the topic of many discussions amongst policymakers, academics and other economic agents.
According to the theory of international finance, international balance of payments and foreign exchange rate have a causal relationship, namely the balance of payments surplus or deficit will affect the change of exchange rate, and the change of exchange rate will affect the balance of payments situation. The international balance of payments is the main component of the current account, and the import and export volume is the most basic and important part.
The question of whether to have a fixed to pegged or floating exchange rate regime was highly debated during the 1970s. But now exchange rate regime in Sweden has shifted from being fixed to pegged, and to a floating regime. Because the government believe floating exchange rate regime can benefit Sweden more, such like Balance of payments does not have to come at the expense of the domestic economy and it guarantees the autonomy of a country’s monetary policy.
Sweden is kind of unique among EU countries. Because the Swedish people voted against a membership in the EMU, that means they have their own currency. One can never say now if Sweden would gain or lose from not joining the EMU.
In light of the foregoing, the purpose of this paper is to examine if the exchange rate volatility affects the Swedish exports and imports in what manner. Three useful variables are included and will be examined. These are the real exchange rate index, data about Sweden import and export and the real effective exchange rate index. Control variables or dummy variables that can be added include major events (such as the establishment of the European Community and its predecessors), some index such as Swedish Human Development Index, ln (Stock Index) etc. The exchange rate volatility’s influence on the trade for a country does not only affect the current account for a country but the whole economy and can also have effects on other countries. Try to make the paper look like new.