The impact of the yuan†dollar exchange rate on Mexican manufacturing exports to the US: A cointegration approach

Víctor Cuevas

The World Economy, 2018, vol. 41, issue 3, 866-883

Abstract: This paper makes use of three econometric methods and three time intervals to evaluate the long†term effects of several key variables on Mexican manufacturing exports to the US. The evidence across econometric techniques and sample periods systematically indicates that: (i) a real depreciation of the yuan†dollar exchange rate reduces Mexican manufacturing exports by lowering the price of Chinese goods in the US market; (ii) a depreciation of the peso†dollar real exchange rate generates a strong supply†side effect due to the high import content of Mexican manufacturing exports, which ultimately leads to lower (rather than higher) sales in the US; and (iii) external demand and labour productivity are positively related to manufacturing exports, whereas real wages are negatively related. Therefore, a falling external demand for Mexican manufacturing products or a real depreciation of the Chinese currency could, to some extent, be offset by increasing labour productivity faster than wages. These findings reflect two fundamental problems of the Mexican economy: (i) low investment in high†quality formal instruction and proper training programs, which gives rise to severe bottleneck points for faster labour productivity growth and (ii) excessive reliance of the export†oriented manufacturing industry on foreign suppliers of intermediate inputs.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/twec.12542

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:bla:worlde:v:41:y:2018:i:3:p:866-883

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920

Access Statistics for this article

The World Economy is currently edited by David Greenaway

More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().