Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi†

Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi† AbstractThis paper estimates the effect of China's exchange rate changes on exports of developing countries in third markets. The degree of competition between China and its developing country competitors in specific products and destinations plays a key role in the identification strategy. The strategy exploits variation across exporters, importers, products and time—afforded both by disaggregated trade data and bilateral exchange rates—to estimate this “competitor country effect.” There is robust evidence of a statistically and quantitatively significant effect. A 10 percent appreciation of China's real exchange rate boosts a developing country's exports at the product level on average by about 1.5–2.5 percent. (JEL F14, F31, F33, O19, O24, P33) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi†

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
1945-7731
D.O.I.
10.1257/pol.20150293
Publisher site
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Abstract

AbstractThis paper estimates the effect of China's exchange rate changes on exports of developing countries in third markets. The degree of competition between China and its developing country competitors in specific products and destinations plays a key role in the identification strategy. The strategy exploits variation across exporters, importers, products and time—afforded both by disaggregated trade data and bilateral exchange rates—to estimate this “competitor country effect.” There is robust evidence of a statistically and quantitatively significant effect. A 10 percent appreciation of China's real exchange rate boosts a developing country's exports at the product level on average by about 1.5–2.5 percent. (JEL F14, F31, F33, O19, O24, P33)

Journal

American Economic Journal: Economic PolicyAmerican Economic Association

Published: Nov 1, 2017

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