Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi
American Economic Journal: Economic Policy
vol. 9,
no. 4, November 2017
(pp. 344-66)
Abstract
This 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.Citation
Mattoo, Aaditya, Prachi Mishra, and Arvind Subramanian. 2017. "Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi." American Economic Journal: Economic Policy, 9 (4): 344-66. DOI: 10.1257/pol.20150293Additional Materials
JEL Classification
- F14 Empirical Studies of Trade
- F31 Foreign Exchange
- F33 International Monetary Arrangements and Institutions
- O19 International Linkages to Development; Role of International Organizations
- O24 Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
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