Global Trade Flows: Revisiting the Exchange Rate Elasticities
This paper contributes to the debate on the magnitude of exchange rate elasticities by providing a set of price and quantity elasticities for 51 advanced and emerging-market economies. Specifically, we report for each of these countries the elasticity of trade prices and trade quantities on the expo...
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| Veröffentlicht in: | Open economies review 2020-02, Vol.31 (1), p.25-78 |
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| creator | Bussière, Matthieu Gaulier, Guillaume Steingress, Walter |
| description | This paper contributes to the debate on the magnitude of exchange rate elasticities by providing a set of price and quantity elasticities for 51 advanced and emerging-market economies. Specifically, we report for each of these countries the elasticity of trade prices and trade quantities on the export and on the import side, as well as the reaction of the trade balance. To this aim, the paper uses a large unified database of highly disaggregated bilateral trade flows, covering 5000 products and more than 160 trading partners. We present a range of estimates using not only standard regression techniques but also generated regressors that aim to uncover changes in the exchange rate elasticities due to unobserved marginal costs and competitor prices in the importing market. Our results show that quantity elasticities are significantly below one, pass-through is incomplete and export prices react significantly to exchange rate changes. In spite of low quantity elasticities, the trade balance reacts positively to a depreciation in
all
countries because export and import prices adjust. Overall, our findings suggest that exchange rate changes can play an important role in addressing global trade imbalances. |
| doi_str_mv | 10.1007/s11079-019-09573-3 |
| format | Article |
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all
countries because export and import prices adjust. Overall, our findings suggest that exchange rate changes can play an important role in addressing global trade imbalances.</description><identifier>ISSN: 0923-7992</identifier><identifier>EISSN: 1573-708X</identifier><identifier>DOI: 10.1007/s11079-019-09573-3</identifier><language>eng</language><publisher>New York: Springer US</publisher><subject>Development Economics ; Economic Policy ; Economics ; Economics and Finance ; Elasticity ; European Integration ; Foreign exchange rates ; International Economics ; International trade ; Macroeconomics/Monetary Economics//Financial Economics ; Marginal costs ; Market economies ; Prices ; Research Article ; Trade flows ; Trading</subject><ispartof>Open economies review, 2020-02, Vol.31 (1), p.25-78</ispartof><rights>Crown 2020</rights><rights>Open Economies Review is a copyright of Springer, (2020). All Rights Reserved.</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c453t-4ff23426a89d111124ededf7ad8d9bb395bc72b003431f99846dc79d57bcef463</citedby><cites>FETCH-LOGICAL-c453t-4ff23426a89d111124ededf7ad8d9bb395bc72b003431f99846dc79d57bcef463</cites><orcidid>0000-0002-9843-6018</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://link.springer.com/content/pdf/10.1007/s11079-019-09573-3$$EPDF$$P50$$Gspringer$$H</linktopdf><linktohtml>$$Uhttps://link.springer.com/10.1007/s11079-019-09573-3$$EHTML$$P50$$Gspringer$$H</linktohtml><link.rule.ids>314,780,784,27924,27925,41488,42557,51319</link.rule.ids></links><search><creatorcontrib>Bussière, Matthieu</creatorcontrib><creatorcontrib>Gaulier, Guillaume</creatorcontrib><creatorcontrib>Steingress, Walter</creatorcontrib><title>Global Trade Flows: Revisiting the Exchange Rate Elasticities</title><title>Open economies review</title><addtitle>Open Econ Rev</addtitle><description>This paper contributes to the debate on the magnitude of exchange rate elasticities by providing a set of price and quantity elasticities for 51 advanced and emerging-market economies. Specifically, we report for each of these countries the elasticity of trade prices and trade quantities on the export and on the import side, as well as the reaction of the trade balance. To this aim, the paper uses a large unified database of highly disaggregated bilateral trade flows, covering 5000 products and more than 160 trading partners. We present a range of estimates using not only standard regression techniques but also generated regressors that aim to uncover changes in the exchange rate elasticities due to unobserved marginal costs and competitor prices in the importing market. Our results show that quantity elasticities are significantly below one, pass-through is incomplete and export prices react significantly to exchange rate changes. In spite of low quantity elasticities, the trade balance reacts positively to a depreciation in
all
countries because export and import prices adjust. Overall, our findings suggest that exchange rate changes can play an important role in addressing global trade imbalances.</description><subject>Development Economics</subject><subject>Economic Policy</subject><subject>Economics</subject><subject>Economics and Finance</subject><subject>Elasticity</subject><subject>European Integration</subject><subject>Foreign exchange rates</subject><subject>International Economics</subject><subject>International trade</subject><subject>Macroeconomics/Monetary Economics//Financial Economics</subject><subject>Marginal costs</subject><subject>Market economies</subject><subject>Prices</subject><subject>Research Article</subject><subject>Trade flows</subject><subject>Trading</subject><issn>0923-7992</issn><issn>1573-708X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2020</creationdate><recordtype>article</recordtype><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><recordid>eNp9kNtKAzEQhoMoWKsv4FXA69WctrMRvJDSVqEglArehWwO7ZZ1tyZbD29v2hV6Z2DIDPP_M8OH0DUlt5QQuIuUEpAZoSlkDjzjJ2hA9wmQ4u0UDYhkKZeSnaOLGDeEEA5QDNDDrG5LXeNl0Nbhad1-xXu8cJ9VrLqqWeFu7fDk26x1s3J4obtU1Tp2lUltFy_Rmdd1dFd__xC9TifL8VM2f5k9jx_nmRE57zLhPeOCjXQhLU2PCWed9aBtYWVZcpmXBliZbhKceikLMbIGpM2hNM6LER-im37uNrQfOxc7tWl3oUkrFeMFy3MBBxXrVSa0MQbn1TZU7zr8KErUHpPqMamESR0wKZ5MuDc50zZVPFogGXIQBJKE95KYmolDOG7_Z_AvP890Dw</recordid><startdate>20200201</startdate><enddate>20200201</enddate><creator>Bussière, Matthieu</creator><creator>Gaulier, Guillaume</creator><creator>Steingress, Walter</creator><general>Springer US</general><general>Springer Nature B.V</general><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>885</scope><scope>8AO</scope><scope>8BJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ANIOZ</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRAZJ</scope><scope>FRNLG</scope><scope>F~G</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>M0C</scope><scope>M1F</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope><orcidid>https://orcid.org/0000-0002-9843-6018</orcidid></search><sort><creationdate>20200201</creationdate><title>Global Trade Flows: Revisiting the Exchange Rate Elasticities</title><author>Bussière, Matthieu ; 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Specifically, we report for each of these countries the elasticity of trade prices and trade quantities on the export and on the import side, as well as the reaction of the trade balance. To this aim, the paper uses a large unified database of highly disaggregated bilateral trade flows, covering 5000 products and more than 160 trading partners. We present a range of estimates using not only standard regression techniques but also generated regressors that aim to uncover changes in the exchange rate elasticities due to unobserved marginal costs and competitor prices in the importing market. Our results show that quantity elasticities are significantly below one, pass-through is incomplete and export prices react significantly to exchange rate changes. In spite of low quantity elasticities, the trade balance reacts positively to a depreciation in
all
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| subjects | Development Economics Economic Policy Economics Economics and Finance Elasticity European Integration Foreign exchange rates International Economics International trade Macroeconomics/Monetary Economics//Financial Economics Marginal costs Market economies Prices Research Article Trade flows Trading |
| title | Global Trade Flows: Revisiting the Exchange Rate Elasticities |
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