Title

New empirical assessment of export price competitiveness: Industry-specific real effective exchange rates in Asia

Document Type

Journal Article

Publication Title

North American Journal of Economics and Finance

ISSN

10629408

Publisher

Elsevier

School

School of Business and Law

RAS ID

35308

Funders

Japan Society for the Promotion of Science

Comments

Sato, K., Shimizu, J., Shrestha, N., & Zhang, S. (2020). New empirical assessment of export price competitiveness: Industry-specific real effective exchange rates in Asia. The North American Journal of Economics and Finance, 54, article 101262. https://doi.org/10.1016/j.najef.2020.101262

Abstract

© 2020 Elsevier Inc. This study constructed the industry-specific real effective exchange rate (I-REER) as a new measure of export competitiveness by industry. By aggregating I-REERs to a country-level I-REER for nine Asian economies, we assess the effect of REER appreciation on real exports by employing both static common-correlated effects (CCE) estimator and cross-sectionally augmented distributed lag (CS-DL) estimator (a dynamic version of the CCE estimator) to control for heterogeneity in the impact of unobservable common factors. The degree of REER's negative effect is found to have declined in recent years, which may imply that growing global value chains (GVCs) tend to mitigate the negative effect of REER appreciation on exports. As is well known that Asia is characterized as active regional trade and investment through GVCs, further regional integration would make Asian economies have less concern about policy coordination for regional exchange rate stability in Asia.

DOI

10.1016/j.najef.2020.101262

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