A note on measuring the effects of exchange rate changes on Norwegian exports of seafood

Abstract

The purpose of this note is to develop a very simple, yet consistent structural model of the Norwegian seafood trade that highlights how trade flows and prices are affected by changes in exchange rates. By using a class of models called Equilibrium Displacement Models (EDM’s) the model is solved for the reduced-form elasticities to indicate the effects exchange rates changes has on producer surplus. Our “best-guess” estimate of the short-run currency effect during the first eight months of 2002 indicate that the exchange caused an initial reduction in Norwegian producer surplus equal to 1.158 million kroner.