| By: |
Aaditya Mattoo;
Prachi Mishra;
Arvind Subramanian |
| Abstract: |
This paper estimates the impact of China’s exchange rate changes on exports
of competitor countries in third markets, which we call the "spillover
effect". We use recent theory to develop an identification strategy in which
competition between China and its developing country competitors in specific
products and destinations plays a key role. We exploit the variation -
afforded by disaggregated trade data - across exporters, importers, product,
and time to estimate this spillover effect. We find robust evidence of a
statistically and quantitatively significant spillover effect. Our estimates
suggest that a 10 percent appreciation of China’s real exchange rate boosts
on average a developing country’s exports of a typical 4-digit HS product
category to third markets by about 1.5-2 percent. The magnitude of the
spillover effect varies systematically with product characteristics as implied
by theory. |
| Keywords: |
China , Competition , Developing countries , Exchange rate adjustments , Exchange rates , Exports , Spillovers , |
| Date: |
2012–03–27 |
| URL: |
http://d.repec.org/n?u=RePEc:imf:imfwpa:12/88&r=cna |