Value-added Trade, Exchange Rate Pass-Through and Trade Elasticity: Revisiting the Trade Competitiveness

Syed Uddin

2016 Papers from Job Market Papers

Abstract: How is exchange rate pass-through (ERPT) measures affected by increasing participation in global value chains? This paper measures ERPT for value-added trade, where intermediate inputs are shared among sectors and countries in a back-and-forth manner for producing a single final product. Estimation of pass-through was done using World Input-Output Database (WIOD), World Economic Outlook (WEO), and OECD statistics. Empirically estimated findings suggest that ignoring the value-added trade will cause a systematic upward bias in the estimation of ERPT. From empirical investigation, it is also evident that there exists substantial heterogeneity in pass-through rates across sectors: sectors with high-integration into global market functions with a lower rate of exchange in comparison to sectors with less integration.

JEL-codes: F14 F23 F41 L16 (search for similar items in EconPapers)
Date: 2016-10-09
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (3)

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