Spillover Effects of Exchange Rates: A Study of the Renminbi
31 Pages Posted: 15 Mar 2012 Last revised: 20 Mar 2012
Date Written: March 13, 2012
Abstract
This paper estimates the impact of China’s exchange rate changes on exports of competitor countries in third markets, known as the “spillover effect.” Recent theory is used to develop an identification strategy in which competition between China and its developing country competitors in specific products and destinations plays a key role. The variation is used — afforded by disaggregated trade data — across exporters, importers, product, and time to estimate this spillover effect. The results show robust evidence of a statistically and quantitatively significant spillover effect. Estimates suggest that, on average, a 10 percent appreciation of China’s real exchange rate boosts a developing country’s exports of a typical 4-digit Harmonized System (HS) product category to third markets by about 1.5 to 2 percent. The magnitude of the spillover effect varies systematically with product characteristics as implied by theory.
Keywords: exchange rates, exports, China, spillover
JEL Classification: F13, F14, O53
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The External Impact of China's Exchange Rate Policy: Evidence from Firm Level Data
By Barry Eichengreen and Hui Tong
-
The External Impact of China's Exchange Rate Policy: Evidence from Firm Level Data
By Barry Eichengreen and Hui Tong
-
The Yuan’s Exchange Rates and the Pass-Through Effects on Prices of Japanese and the US Imports
By Yuqing Xing
-
The Yuan’s Exchange Rates and Pass-Through Effects on the Prices of Japanese and US Imports
By Yuqing Xing
-
Spillover Effects of Exchange Rates: A Study of the Renminbi
By Aaditya Mattoo, Prachi Mishra, ...
-
Spillover Effects of Exchange Rates: A Study of the Renminbi
By Aaditya Mattoo, Prachi Mishra, ...
-
Beggar-Thy-Neighbor Effects of Currency Undervaluation: Is China the Tip of the Iceberg?
By Samba Mbaye