Global Value Chains and Effective Exchange Rates at the Country-Sector Level

Nikhil Patel, Zhi Wang () and Shang-Jin Wei

No 20236, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The real effective exchange rate (REER) is one of the most cited statistical constructs in open-economy macroeconomics. We show that the models used to compute these numbers are not rich enough to allow for the rising importance of global value chains. Moreover, because different sectors within a country participate in international production sharing at different stages, sector level variations are also important for determining competitiveness. Incorporating these features, we develop a framework to compute REER at both the sector and country level and apply it on inter-country input-output tables to study the properties of the new measures of REER for 35 sectors in 40 countries.

JEL-codes: F1 F3 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (40)

Published as NIKHIL PATEL & ZHI WANG & SHANG‐JIN WEI, 2019. "Global Value Chains and Effective Exchange Rates at the Country‐Sector Level," Journal of Money, Credit and Banking, vol 51(S1), pages 7-42.

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Related works:
Journal Article: Global Value Chains and Effective Exchange Rates at the Country‐Sector Level (2019)
Working Paper: Global value chains and effective exchange rates at the country-sector level (2017)
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