The Impact of Inflation on International Trade

Inflation is the most commonly used economic term in the popular media (Hellerstien). A Nexis search in 1996 found 872,000 news stories over the past twenty years that used the word inflation (Hellerstien). Of those 872,000 I am sure that there is a lot that have used the word inflation to express the impacts it has on international trade. Inflation effects trade through increased and decreased prices and value that along with other elements, can influence imports and exports.
Changes in prices here and abroad are also important. If we experience more inflation here than the rest of the world is experiencing, our goods cost more and thus our imports will rise and exports will fall (Buckles). The reverse is true if the rest of the world experiences a greater rate of inflation than we do in the United States (Buckles). For example, in the news paper today there was an article that reported that the US dollar has fallen against the euro. In the article it exposed that there ...