Depreciations without Exports? : Global Value Chains and the Exchange Rate Elasticity of Exports
This paper analyzes how the exchange rate elasticity of exports has changed over time and across countries and sectors, and how the formation of global value chains has affected this relationship. The analysis uses a panel framework covering 46 cou...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/08/24895630/depreciations-without-exports-global-value-chains-exchange-rate-elasticity-exports http://hdl.handle.net/10986/22440 |
| Summary: | This paper analyzes how the exchange
rate elasticity of exports has changed over time and across
countries and sectors, and how the formation of global value
chains has affected this relationship. The analysis uses a
panel framework covering 46 countries over the period
1996-2012, and first finds evidence that the elasticity of
manufacturing export volumes to the real effective exchange
rate has decreased over time. The paper then examines
whether the formation of supply chains has affected this
elasticity using different measures of global value chain
integration. Intuitively, as countries are more integrated
in global production processes, a currency depreciation only
improves the competitiveness of a fraction of the value of
final goods exports. In line with this intuition, the
analysis finds evidence that the rise of participation in
global value chains explains on average 40 percent of the
fall in the elasticity, and that corrections of the real
effective exchange rate for participation in global value
chains do not present the same decreasing pattern in elasticity. |
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