Export Dynamics in Large Devaluations

George Alessandria, Sangeeta Pratap and Vivian Yue

No 62013, Working Papers from Hong Kong Institute for Monetary Research

Abstract: This paper studies export dynamics in emerging markets following large devaluations. We document two main features of exports that are puzzling for standard trade models. First, given the change in relative prices, exports tend to grow gradually following a devaluation. Second, high interest rates tend to suppress exports. To address these features of export dynamics, we embed a model of endogenous export participation due to sunk and per period export costs into an otherwise standard small open economy. In response to shocks to productivity, interest rates, and the discount factor, we find the model can capture the salient features of export dynamics documented. At the aggregate level, the features giving rise to sluggish export dynamics leading to more gradual net export dynamics, sharper contractions in output, and endogenous declines in labor productivity

Keywords: Export Dynamics; Devaluation; Net Exports (search for similar items in EconPapers)
JEL-codes: E31 F12 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2013-05
New Economics Papers: this item is included in nep-dge, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Export dynamics in large devaluations (2013)
Working Paper: Export dynamics in large devaluations (2013)
Working Paper: Export Dynamics in Large Devaluations (2012)
Working Paper: Export Dynamics in Large Devaluations (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hkm:wpaper:062013

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