Global Trade Flows: Revisiting the Exchange Rate Elasticities

M. Bussi Re, Guillaume Gaulier and Walter Steingress
Authors registered in the RePEc Author Service: Matthieu Bussière

Working papers from Banque de France

Abstract: This paper contributes to the debate on exchange rate elasticities by providing a set of price and quantity elasticities for 51 advanced and emerging market economies. Specifically, we report for each of these countries the elasticity of trade prices and trade quantities on the export and on the import side, as well as the reaction of the trade balance. To this aim, the paper uses a large database of highly disaggregated bilateral trade flows, covering 5000 products and more than 160 trading partners. We present a range of estimates using standard regression techniques combined with generated repressors that aim to address key omitted variable biases, relating in particular to unobserved marginal costs and competitor prices in the importing market. We also subject our results to a battery of robustness checks that leave the main findings broadly unchanged. Overall, all countries in our sample satisfy the Marshall-Lerner conditions, suggesting that exchange rate changes can play an important role in addressing global trade imbalances.

Keywords: exchange rates; trade elasticities; exchange rate pass-through; competitiveness (search for similar items in EconPapers)
JEL-codes: C51 F14 F31 F33 F41 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2016
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Related works:
Journal Article: Global Trade Flows: Revisiting the Exchange Rate Elasticities (2020)
Working Paper: Global Trade Flows: Revisiting the Exchange Rate Elasticities (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:608

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