EconPapers    
Economics at your fingertips  
 

Real exchange rate undervaluation and Indonesia’s manufacturing exports

M Rasbin, Mohamad Ikhsan, Beta Y. Gitaharies, Yoga Affandi and Evan Lau

Cogent Economics & Finance, 2021, vol. 9, issue 1, 1930880

Abstract: This study analyzes the impact of real exchange rate undervaluation on Indonesia’s manufacturing exports in 22 manufacturing industries throughout 1990–2015. The study was undertaken by modifying a partial equilibrium model of monopolistic competition for exporting firms and using the augmented mean group (AMG) method. This study confirms that the real exchange rate, both misalignment and changes in levels (depreciation/appreciation), are insignificant in affecting Indonesia’s manufacturing exports. In addition, this study finds that manufactured exports are significantly determined by the manufactured exports in the previous period, real interest rates, real wages, labor productivity, and firm growth. This finding indicates that the exchange rate manipulation policy is not an important factor in strengthening the competitiveness of Indonesia’s manufacturing exports. We suggest policies that play more important roles in driving manufacturing exports are creating a competitive and conducive business climate, lowering domestic interest rates, and reforming the labor system.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/23322039.2021.1930880 (text/html)
Access to full text is restricted to subscribers.

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:taf:oaefxx:v:9:y:2021:i:1:p:1930880

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/OAEF20

DOI: 10.1080/23322039.2021.1930880

Access Statistics for this article

Cogent Economics & Finance is currently edited by Steve Cook, Caroline Elliott, David McMillan, Duncan Watson and Xibin Zhang

More articles in Cogent Economics & Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2025-03-22
Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1930880