Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi

Aaditya Mattoo, Prachi Mishra and Arvind Subramanian

American Economic Journal: Economic Policy, 2017, vol. 9, issue 4, 344-66

Abstract: This paper estimates the effect of China's exchange rate changes on exports of developing countries in third markets. The degree of competition between China and its developing country competitors in specific products and destinations plays a key role in the identification strategy. The strategy exploits variation across exporters, importers, products and time—afforded both by disaggregated trade data and bilateral exchange rates—to estimate this "competitor country effect." There is robust evidence of a statistically and quantitatively significant effect. A 10 percent appreciation of China's real exchange rate boosts a developing country's exports at the product level on average by about 1.5-2.5 percent.

JEL-codes: F14 F31 F33 O19 O24 P33 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/pol.20150293
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Citations: View citations in EconPapers (15)

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