 How do manufacturing exports react to the real exchange rate and foreign demand? The Chilean caseJorge Fornero, Miguel A. Fuentes D. and Andres Gatty () The World Economy, 2020, vol. 43, issue 1, 274-300 Abstract: How do manufacturing exports react to the real exchange rate and to foreign demand? We investigate this question with a Chilean panel data spanning from 2003Q1 to 2016Q4, using publicly available data. In the long term, we find that exports strongly co‐integrate with external demand, whereas not with the level of the real exchange rate. The short‐run elasticities of manufacturing exports differ in size: (a) the elasticity of foreign demand—approximated by trading partners' activity aggregates—ranges between 0.8 and 1.4; and (b) the elasticity with respect to the bilateral real exchange rate is comprehended in the interval [0.4–0.6]. Core estimated elasticities pass usual robustness checks. The fall in manufacturing exports' growth in 2014–16 is consistent with a persistent slowdown in foreign demand, which has been partially offset by an average depreciation of the bilateral real exchange rate (with respect to destination countries of these exports). The transience of the effect of the real exchange rate is coherent with its exhibited stationarity and also consistent with its role of shock absorber. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:43:y:2020:i:1:p:274-300 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
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