Export Dynamics in Large Devaluations

Vivian Yue, Sangeeta Pratap and George Alessandria

No 983, 2012 Meeting Papers from Society for Economic Dynamics

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 terms of trade, we find the model can capture the salient features of export dynamics documented. At the aggregate level, these features of export dynamics affect the net export and debt dynamics and thus have an impact on intertemporal borrowing and lending.

Date: 2012
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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 (2013)
Working Paper: Export Dynamics in Large Devaluations (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:983

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