Reassessing the role of exchange rates in export dynamics: Evidence from a disaggregated industry-level analysis in the case of Nepal

Ashmita Dahal, Rohan Byanjankar, Bhushan Praveen Jangam and Badri Narayan Rath

Economic Analysis and Policy, 2025, vol. 85, issue C, 1752-1759

Abstract: We analyze the impact of traditional and value-added exchange rates on exports across 33 industries in Nepal from 2007 to 2021. Using a panel system generalised method of moments estimator, the study finds that traditional exchange rate appreciation reduces exports, while value-added exchange rate appreciation increases exports. These findings are consistent across manufacturing and services sectors. The study also identifies growing integration into global value chains (GVCs) as a key driver of export dynamics and the disconnect between exports and exchange rates. This research contributes to the literature by highlighting the distinct effects of exchange rates and the importance of GVCs.

Keywords: Exports; Exchange rate; Value-added; Disaggregated industries; Panel system GMM; Nepal (search for similar items in EconPapers)
JEL-codes: C23 F1 G01 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:1752-1759

DOI: 10.1016/j.eap.2025.01.027

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