Global Value Chains and the Exchange Rate Elasticity of Exports

Swarnali Hannan, Maximiliano Appendino and Michele Ruta

No 2015/252, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes how the formation of Global Value Chains (GVCs) has affected the exchange rate elasticity of exports. Using a panel framework covering 46 countries over the period 1996-2012, we first find some suggestive evidence that the elasticity of real manufacturing exports to the Real Effective Exchange Rate (REER) has decreased over time. We then examine whether the formation of supply chains has affected this elasticity using different measures of GVC integration. Intuitively, as countries are more integrated in global production processes, a currency depreciation only improves competitiveness of a fraction of the value of final good exports. In line with this intuition, we find evidence that GVC participation reduces the REER elasticity of manufacturing exports by 22 percent, on average.

Keywords: WP; export; REER elasticity; elasticity; Industriesin GVCs; Real Exchange Rate; Export Growth; Global Value Chains; REER change; GVC participation; export surge; value-added export; manufacturing export; export volume; change elasticity; export deflator; Exports; Real effective exchange rates; Real exchange rates; Exchange rate adjustments; Exchange rates; Global (search for similar items in EconPapers)
Pages: 28
Date: 2015-11-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Journal Article: Global value chains and the exchange rate elasticity of exports (2017)
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