The Exchange Rate Susceptibility of European Core Industries, 1995–2010

35 Pages Posted: 14 Feb 2018

See all articles by David Leuwer

David Leuwer

University of Leipzig

Bernd Süssmuth

University of Leipzig; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: February 2018

Abstract

This study investigates reactions to real exchange rate changes in the German, French and UK automobile and mechanical engineering sectors using monthly data from 1995 to 2010. Our findings indicate that EUR/US$ appreciations hamper exports, but do not necessarily imply an aggravated business climate or export order‐book assessment. This does not apply to the GBP/US$ and corresponding time series for the UK. First and foremost, our fixed coefficient and time‐varying parameter VAR model estimates confirm the extraordinary role of the German key sectors, while currency union membership seems to play a minor role at best. Overall, the exchange rate susceptibility is less profound than claimed by lobbies and held as popular belief.

Keywords: confidence indicators, exporting sectors, structural VAR

Suggested Citation

Leuwer, David and Süssmuth, Bernd, The Exchange Rate Susceptibility of European Core Industries, 1995–2010 (February 2018). The World Economy, Vol. 41, Issue 2, pp. 358-392, 2018, Available at SSRN: https://ssrn.com/abstract=3122780 or http://dx.doi.org/10.1111/twec.12541

David Leuwer (Contact Author)

University of Leipzig ( email )

Marschnerstrasse 31
D-04109 Leipzig, 04109
Germany

Bernd Süssmuth

University of Leipzig ( email )

IEW Institute for Empirical Research in Economics
Grimmaische Str. 12
Leipzig, D-04109
Germany
+49 341 97 33782 (Phone)
+49 341 97 33789 (Fax)

HOME PAGE: http://www.wifa.uni-leipzig.de/iew/professur-oekonometrie/team/prof-dr-bernd-suessmuth.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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