Spillover Effects of Exchange Rates : A Study of the Renminbi
This paper estimates how changes in China's exchange rates would affect exports from competitor countries in third-country markets -- in other words, the "spillover effect." The authors use recent theory to develop an identification...
| Main Authors: | , , |
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| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120309093600 http://hdl.handle.net/10986/3278 |
| Summary: | This paper estimates how changes in
China's exchange rates would affect exports from
competitor countries in third-country markets -- in other
words, the "spillover effect." The authors use
recent theory to develop an identification strategy, with a
key role for the competition between China and its
developing country competitors in specific products and
export destinations. Using disaggregated trade data, they
estimate the spillover effect by exploiting the variation
across different exporters, importers, products, and time
periods. They find a spillover effect that is statistically
and quantitatively significant. Their estimates suggest that
a 10-percent appreciation of China's real exchange rate
boosts a developing country's exports of a typical
four-digit Harmonized System product category to third
markets by about 1.5 to 2 percent on average. The magnitude
of the spillover effect varies systematically with the
characteristics of products, such as the extent to which
they are differentiated. |
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