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Discussion Paper
How Global Value Chains Change the Trade-Currency Relationship
This note summarizes the main results of the de Soyres et al. (2018) paper, drawing out the most policy-relevant implications.
Discussion Paper
Forward Looking Exporters
Economic textbooks outline a simple relationship between movements in a country’s exchange rate and its export volumes. When the exporter’s currency depreciates, export volumes are expected to increase due to competitiveness gains in foreign markets.
Working Paper
Bought, Sold and Bought Again: The Impact of Complex Value Chains on Export Elasticities
Global value chain (GVC) participation affects the relationship between trade volumes and exchange rate movements. Guided by a simple theory, we show that exports react to the exchange rate between the country producing value added contained in exports and the country of final absorption for this value added. Three predictions follow: (i) a higher share of foreign value added in exports reduce the responsiveness of export volumes to exchange rate changes, (ii) a greater share of exports that returns as imports also reduce the responsiveness of export volumes and (iii) a higher share of inputs ...
Working Paper
Forward Looking Exporters
This paper studies the role of expectations in driving export adjustment. We assemble bilateral data on spot exchange rates, one year ahead exchange rate forecasts and HS2-product export data for 11 exporting countries and 64 destinations, covering the 2006–2014 period. Results from fixed effects regressions and an instrumental variables approach show that expectations of exchange rate changes are an important channel for export adjustment. A one percent expected exchange rate depreciation over the next year is associated with a 0.96 percent increase in the extensive margin (entry of new ...