EconPapers    
Economics at your fingertips  
 

The Influence of Intra-Industry Trade on Export Sensitivity to Exchange Rates

Yoko Oguro

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper adds to the literature that suggests that exports become less sensitive to exchange rate movements under certain circumstances. Focusing on the industry-specific sensitivity of export quantities to exchange rates in the context of intra-industry trade (IIT), this paper theoretically and empirically investigates this relationship. It is assumed that more IIT implies a smaller elasticity of substitution among differentiated products and vice versa. The model presented suggests that the gap in production costs has an influence on IIT as well. The empirical analysis investigates six cross-country industry-panels for the bilateral trade of eight East Asian countries, Japan, and the United States with the EU, Asia, Japan, and North America. The results confirm that export sensitivity to exchange rates declines as the extent of IIT increases. The policy implication of the results is that exchange rate revaluations become a less powerful tool to redress trade imbalances when substantial IIT exists.

Keywords: Trade; Exchange rates; Intra-industry trade (search for similar items in EconPapers)
JEL-codes: F00 F10 F14 F19 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hi-stat.ier.hit-u.ac.jp/research/discussion/2007/pdf/D07-222.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hst:hstdps:d07-222

Access Statistics for this paper

More papers in Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Tatsuji Makino ().

 
Page updated 2025-04-08
Handle: RePEc:hst:hstdps:d07-222