scholarly journals A Primer on Real Effective Exchange Rates: Determinants, Overvaluation, Trade Flows and Competitive Devaluation

2005 ◽  
Author(s):  
Menzie Chinn
Keyword(s):  
Exchange Rates ◽  
Trade Flows ◽  
Effective Exchange

scholarly journals A Predictive Effect of Exchange Rates on Value-Added Free Trade

2020 ◽  
Vol 12 (21) ◽  
pp. 9146
Author(s):  
Myoung Shik Choi
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Trade Balance ◽  
Value Added ◽  
Trade Flows ◽  
Currency Depreciation ◽  
Effective Exchange ◽  
The Exchange Rate ◽  
Positive Effect

The study investigates a predictive exchange rate effect on value-added trade flows on global value chains. We theoretically review the role of exchange rates on international trade based on insular, open, and global value chained economies. This paper empirically confirms a retro forecasting rule of the exchange rate on exports and trade balance using the value-added data for the period from 1995 to 2015. The first result is that real effective exchange rates have predictive elasticity information for the value-added trade flows. The second is that exchange rates have two practical effects on trade flows. The value-added exchange rate hurts the value-added trade balance due to increased intermediate trades, but the exchange rate has a positive effect on the gross trade balance. We would expect that value-added exports with trade balance can be improved in all sample countries when the value-added exchange rate is increasing. The main contribution is further evidence on distinguishing the currency depreciation on the value-added trade from the depreciation on the gross trade to achieve higher growth.

Sign in / Sign up

Export Citation Format

Share Document