External adjustments and coordinated exchange rate policy in Asia

In this paper, we estimate structural VAR models with contemporaneous restrictions based on neo-classical and Keynesian theories to investigate whether the cause of current account surpluses for East Asian economies is a “saving glut” or undervalued currencies. Analytical results show that the major determinant of the current account is the real effective exchange rate for all East Asian countries with the exception of China for which the major determinant is domestic GDP. Accordingly, the recently requested revaluation of the Chinese yuan may not be an effective policy for reducing the Chinese current account surplus, and may affect other Asian current accounts. We also investigate whether a Chinese currency revaluation would contribute to the improvement of current account imbalances in East Asia and find that a revaluation would, indeed, improve the current accounts of Japan, Korea, Indonesia, and Thailand. Since the trade structures of major East Asian countries are substitutes with that of China, a Chinese currency revaluation might not lead to a decrease in East Asian current account surpluses. Coordination of currency policy among East Asian countries is, therefore, needed to solve the global current account imbalance.     

The common trend and common cycle of exports and the real exchange rate: Empirical results from Swiss data

Conclusion This paper contains an empirical analysis of the relationship of Swiss goods exports, the real exchange rate and world trade, using the common-trend-common-cycle methodology. This exercise shows that the trend and cyclical dependence of these variables are strongly different: exports and the real exchange rate exhibit a positive long-run or trend dependence of world trade whereas the short-run or cyclical relationship of exports to the real exchange rate is strongly negative with approximately a unit elasticity. These results, which differ strongly from standard dynamic regression or error correction estimates, can be interpreted as follows. In the short run we observe the strong negative cyclical relationship between exports and the real exchange rate, which we expect from short-run macroeconomic models with sticky prices. If we make the reasonable assumption that short-run real exchange rate movements are exogenous to exports and, for instance, caused by monetary policy then we come to the conclusion that cyclical real exchange rate variations lead to strong export cycles. However, in the long run, there is a completely different positive comovement of these two variables, which are both driven by the world trade trend. This common trend of exports and the real exchange rate can be understood as an equilibrium reaction of both variables, price and quantity of the exported goods, to exogenous changes in world trade given a production technology available for the country.     

The effect of exchange rate changes on Japanese consumption exports

This paper investigates how exchange rates affect Japanese exports. This is difficult because many of Japan's exports are used to produce goods for re-export. An appreciation in the importing country that decreases exports can decrease its imported inputs from Japan. To avoid this bias we examine consumption exports. Using a panel dataset of Japan's consumption exports to 17 countries over the 1988–2009 period, we find exchange rate elasticities of about one. These results indicate that the large swings in the value of the yen over the last decade have caused large swings in the volume of Japanese exports.     

The global exchange rate system in transition

Summary The aim of this paper is to assess reform proposals allowing a transition from the present international exchange rate mechanism to a more effective successor. Judgments are founded on preventing the drawbacks of the Bretton Woods system, using new theoretical findings, and building on recent international cooperation efforts. Features of an optimal global exchange rate system for the near future are: soft target zones for the major currencies, sterilised exchange market interventions to counter bandwagon effects, and currency blocs around the major currencies. For the longer term, Williamson's extended target zone is a potential candidate, despite missing indispensable information.The author thanks S.K. Kuipers, B. Leeftink and J.K. Martijn for their useful comments on the draft.     

Global value chains participation and productivity gains for North African firms

The emergence of global value chains (GVCs) has provided some firms the opportunity to internationalize by specializing in the production of specific inputs or tasks along the chain, with a direct impact on a country’s competitiveness. China, for instance, managed to enter low value added phases in GVCs to rapidly become a major player in world trade. Against this background, this paper asks whether North Africa, given its favourable geographic position in the Mediterranean and proximity to Europe, can grab similar opportunities. In particular, it analyzes the GVCs participation of North African firms and its implications for productivity. Since the coordination of vertically fragmented production processes increasingly relies on an adequate level of quality and reliability, especially when the inputs from several stages and locations must come together in a specific way, we identify firms involved in GVCs as traders with internationally recognized quality certification. Using a propensity score matching diff-in-diff method, the paper finds that firms that enter GVCs both perform better ex ante and show additional productivity gains ex post. Results suggest that policies designed to support certifications and compliance with international standards and to increase trust between firms in different countries, represent an important tool for linking developing countries to global production networks, with possible positive consequences on their economic development and growth.     

Investigating the effect of exchange rate changes on china’s processed exports

Many argue that the renminbi needs to appreciate to rebalance China’s trade. However, empirical evidence on the effects of an RMB appreciation on China’s exports has been mixed for the largest category of exports, processed exports. Since much of the value-added of these goods comes from parts and components produced in Japan, South Korea, and other East Asian supply chain countries, it is important to control for exchange rate changes in these countries. Employing DOLS techniques and quarterly data, this paper finds that exchange rate appreciations across supply chain countries would cause a much larger drop in processed exports than a unilateral appreciation of the RMB.     

Trade policy and global value chains: tariffs versus non-tariff measures

Review of World Economics - Globalisation is increasingly characterised by intertwined geographical and local production processes through global value chains (GVCs). In the presence of GVCs,...     

Looking into global value chains: influence of foreign services on export performance

Using data from the OECD Inter-Country Input–Output database, we explore the impact of foreign services value added content of exports on export performance, specifically on duration of trade. Our data show that the share of foreign services content in manufacturing exports grows from 1995 to 2011, in a way similar to foreign goods content, and in contrast to the decreasing share of domestic services. Moreover, the share of foreign services value added content is larger for developing and emerging countries than for advanced countries. Our econometric findings confirm that foreign services value added embodied in manufacturing exports contribute positively to more resilient exports relationships, a positive effect which occurs for the three groups of manufacturing industries (high, medium and low technology industries) and, for each group, it is more pronounced for developing and emerging economies.     

A model of exchange rate determination in a dual exchange rate mechanism

Summary In this paper a theoretical model of exchange rate determination in the dual exchange rate mechanism is established. The role of interest arbitrageurs, speculators and hedgers in the official and the financial markets (both spot and forward) is analysed. For each of the categories of participants excess demand functions for foreign exchange are derived, which lead to the equilibrium condition for the various market segments. Also the main links between the different markets are discussed.This paper is based on chapter II of my Ph. D. dissertation submitted to the John Hopkins University. I am grateful to Professors Bela Balassa and Kirg Niehans for helpful comments. Also Zoran Hodjera (IMF) and Paul De Grauwe (KUL) provided stimulating criticism.     

The effect of exchange rates on firm exports and the role of FDI

This paper studies how exchange rate movements affect the export market entry and intensity decision of firms and the export behaviour of multinationals in the UK. Using data on British manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. Multinationals have at their disposal a greater array of instruments to deal with exchange rates changes, although their use may vary according to the motives behind FDI. We also find important differences according to the country of origin of multinational firms. Multinationals firms originating from outside of the EU are less affected by changes in the exchange rate compared to those inside, who appear similarly affected as domestic firms.     

Exchange rate pass-through and rivalry in the Swiss automobile market

Exchange Rate Pass-Through and Rivalry in the Swiss Automobile Market. —This paper investigates the pricing rivalry among foreign automobile producers in the Swiss market. The main results from the dynamic analysis of two categories of automobiles between 1977 and 1991 are: First, the degree of exchange rate pass-through differs among source-countries despite the absence of quantitative restrictions on imports and of domestic production facilities. However, for some countries, pricing strategies show remarkable consistency across product categories and time spans. Second, the degree of exchange rate pass-through is low, especially in the market for small-size automobiles. Third, this low degree of pass-through may be attributed to a low degree of competition among foreign sellers.     

2008年我国外贸进出口总值达2．56万亿美元

海关总署统计数字显示,2008年我国外贸进出口总值为25616．3亿美元,同比增长17．8％。     

关于利率与汇率联系的分析

一、研究利率与汇率联系的重要性 维护国家经济金融安全，寻求内部经济和外部经济平衡是各国追求的目标，利率和汇率的变动在实行这一目标中起着至关重要的作用。利率政策是实现内部均衡的关键，汇率政策是外部平衡的关键，而利率政策和汇率政策的协调配合是内外经济平衡的前提。虽然，我国尚未实现资本帐户开放，资本流入（出）仍受限制，汇率变动对调节资本流动的作用并未充分显现，我国还未实现利率市场化，利率与汇率之间的互动性不强，     

Real exchange rate and manufacturing employment in China

The impacts of the real exchange rate on employment and its channels are investigated. A real appreciation, (1) by switching factors from workers to imported inputs (technological channel), (2) by decreasing exports (export volume channel), (3) by exerting pressure on efficiency improvement (efficiency channel), exerts an effect on employment. Using the panel data of the 29 Chinese provinces for the period 1993–2002, the econometric results show statistically significant negative effects of the real appreciation of the renminbi on manufacturing employment. The three channels are statistically significant, the technological channel being the most important.     

A theory of exchange rate determination and adjustment

Zusammenfassung Eine Theorie der Bestimmung und Anpassung von Wechselkursen. — In diesem Aufsatz wurde untersucht, wie die Wechselkurse in einem System frei flexibler Preise bestimmt werden. Dabei wurde hier erstmals zwischen lang- und kurzfristigen Nachfrageelastizit?ten unterschieden. Eine solche Unterscheidung scheint empirisch wichtig zu sein. Die Ergebnisse der hier vorgelegten Untersuchung widersprechen denen, die sich ergeben, wenn man — wie Dornbusch — Modelle mit starren Preisen verwendet. Insbesondere sine St?rungen der realen Ausgaben — nicht monet?re St?rungen — in diesem Zusammenhang unvermeidlich mit überschieΒenden Wechselkursanpassungen verbunden. Dieses Ergebnis zeigt, daΒ es eine nützliche Aufgabe für die Geldpolitik w?re zu versuchen, die Wechselkursbewegungen, die durch autonome Ausgaben?nderungen verursacht werden, zu gl?tten.

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Résumé Une théorie delá détermination et de l’ajustement du taux de change. — Cet article a considéré la détermination des taux de change dans un système caractérisé par des prix librement flexibles. L’innovation de cet article est la distinction entre 1’ élasticité de la demande á court terme et á long terme. Une telle distinction apparait empiriquement importante. Les résultats de cet article sont antithétiques á ceux qui se dérivent des modèles de type Dornbusch avec des prix rigides. Spécifiquement, les variations des dépenses réelles, pas des chocs monétaires, sont inévitablement associées avec des surajustements des taux de change au comptant. Ce résultat indique qu’il y a un r?le utile pour la politique monétaire d’essayer de glisser des mouvements du taux de change causés par des changements autonomes des dépenses.

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Resumen Una teorfa sobre la determinación y ajuste del tipo de cambio. — En este articulo se ha considerado la determinación de tipos de cambio en un marco caracterizado por precios libremente flexibles. La innovación consiste en la introducción de la distinción entre elasticidades de demanda de corto y largo plazo. Esta distinci?n parece ser empfricamente importante. Los resultados de este articulo son antitéticos a aquéllos que emergen de precios adheridos de modelos tipo Dornbusch. Especificamente, perturbaciones reaies de gasto, no perturbaciones monetarias, estan en este contexto inevitablemente asociadas a sobreajustes puntuales del tipo de cambio. Este resultado indica, que un papel util de la politica monetaria, es intentar suavizar los movimientos de tipo de cambio causados por desplazamientos aut?nomos del gasto.

     

Assessing the impact of high-technology exports on the growth rate and structure of the Russian economy

The article describes an interindustry interaction model and the modeling of the impact of high-technology exports on GDP growth in the short run (2007–2015). It considers both the “net” impact of the high-technology export of GDP growth and the impact adjusted for import substitution processes.     

The keynesian and classical determination of the exchange rate

Zusammenfassung Die Bestimmung des Wechselkurses im keynesianischen und klassischen Model. — Im Modell des langfristigen Gleichgewichts wird bei vollkommener Kapitalmobilit?t der Zinssatz durch das Zusammenwirken der Weltm?rkte für Güter und Kapital bestimmt, und zwar sowohl nach Keynes als auch nach der Quantit?tstheorie. Beide Ans?tze haben im Hinblick auf die internationalen Zusammenh?nge eines gemeinsam: Die nationalen Güterm?rkte geben den Gleichgewichtswert des realen Wechselkurses an. Dieser Aufsatz unterstreicht auch die Wirkung einer expansiven Geldpolitik auf den realen Wechselkurs und das Realeinkommen im Rahmen der keynesianischen Theorie und auf den realen und nominalen Wechselkurs sowie das Preisniveau im klassischen Modell, und zwar sowohl bei nur einem Land als auch im Zwei-L?nder-Fall. Was die langfristigen Wirkungen betrifft, so ergibt sich im Zwei-L?nder-Fall des keynesianischen Modells, eine Senkung des Zinssatzes auf dem Weltmarkt, eine Zunahme des heimischen und eine Abnahme des ausl?ndischen Einkommens sowie ein Anstieg des Wechselkurses, wobei der reale mit dem nominalen identisch ist. Beim klassischen Ansatz muβ man zwischen Auβengeld- und Innengeld-Operationen unterscheiden, weil nur letztere den Zinssatz beeinflussen. Eine expansive Geldpolitik gleich welcher Art l?βt den realen Wechselkurs unver?ndert, jedenfalls auf lange Sicht.

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Résumé La détermination keynésienne et classique du taux de change. — Donnée la mobilité parfaite du capital et l’équilibre à long terme l’interaction des marchés mondiaux des biens et de la monnaie détermine le taux d’intérêt en cadre keynésien aussi bien qu’en cadre de la théorie quantitative. Les deux approches ont, s’ils sont transposés dans le contexte de l’économie internationale, un aspect essentiel en commun: les marchés des biens nationaux indiquent la valeur d’équilibre du taux de change réel. De plus, cet article démontre l’effet d’une politique monétaire expansionniste sur le taux de change réel et sur le revenu réel en cadre keynésien, et sur le taux réel et nominal aussi bien que sur le niveau de prix en cadre classique, dans un modèle à seulement un pays et à deux pays. Regardant les effets à long terme dans le contexte d’un modèle à deux pays du type keynésien, le taux d’intérêt mondial et le revenu étranger baissent, le revenu intérieur et le taux de change (réel identique au taux nominal) montent. Au cas de l’approche classique il faut différencier entre des opérations du ?outside? et ?inside money?, parce qu’elles ne sont que les dernières qui affectent le taux d’intérêt. Une politique monétaire expansionniste de deux types n’influence pas le taux de change réel, au moins à long terme.

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Resumen La determinación keynesiana y clàsica de la tasa de cambio. — Bajo movilidad perfecta del capital y bajo consideraciones de equilibrio de largo plazo, la interacción de los mercados mundiales de bienes y dinero determina la tasa de interés tanto dentro de un marco keynesiano como de uno teórico-cuantitativo. Ambos planteamientos, cuando son transpuestos a un contexto de la economía international, tienen una característica esencial en común: los mercados de bienes nacionales indican el valor de equilibrio de la tasa de cambio real. En este artículo también se establece el efecto de una política monetaria expansiva sobre la tasa de cambio real y el ingreso real en el marco keynesiano, y sobre la tasa de cambio real y nominal y el nivel de precios en el maxco clásico, ambos dentro de un modelo de uno y de dos países. En cuanto a los efectos de largo plazo se refiere, dentro del contexto de un modelo keynesiano de dos países hay una caída en la tasa de interés mundial y el ingreso externo, y un alza en el ingreso interno y la tasa de cambio (real idéntica a la nominal). Para el planteamiento clásico se debe diferenciar entre operaciones monetarias externas e internas, porque sólo las últimas afectan la tasa de interés. Una política monetaria expansiva de ambos tipos deja la tasa de cambio real invariable, por lo menos en el largo plazo.

     

The dilemma of exchange rate arrangements in East Asia

This paper analyzes exchange rate flexibility in East Asia and explores what has changed since the Asian financial crisis. Our focus is not on the choice of an appropriate exchange rate regime in East Asia, but rather on exchange rate flexibility and management in the region. We find that exchange rate management in East Asia differs based on the country and the time period. We identify major concerns about current exchange rate arrangements in East Asia, including asymmetric responses to external shocks, competitive devaluation, and the dilemma of choosing between asset dollarization and liability dollarization. The paper concludes with some policy implications for an exchange rate arrangement in East Asia.