A China Round of Multilateral Trade Negotiations

Aaditya Mattoo, Prachi Mishra () and Arvind Subramanian
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Prachi Mishra: International Monetary Fund

No WP12-4, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper estimates the impact of China’s exchange rate changes on exports of competitor countries in third markets, known as the “spillover effect.” Recent theory is used to develop an identification strategy in which competition between China and its developing country competitors in specific products and destinations plays a key role. The variation is used—afforded by disaggregated trade data—across exporters, importers, product, and time to estimate this spillover effect. The results show robust evidence of a statistically and quantitatively significant spillover effect. Estimates suggest that, on average, a 10 percent appreciation of China’s real exchange rate boosts a developing country’s exports of a typical 4-digit Harmonized System (HS) product category to third markets by about 1.5 to 2 percent. The magnitude of the spillover effect varies systematically with product characteristics as implied by theory.

Keywords: exchange rates; exports; China; spillover (search for similar items in EconPapers)
JEL-codes: F13 F14 O53 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-cna and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: A China Round of Multilateral Trade Negotiations (2011)
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