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(Reference retrieved automatically from Web of Science through information on FAPESP grant and its corresponding number as mentioned in the publication by the authors.)

he relationship between exchange rate and structural change: an approach based on income elasticities of trad

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Author(s):
Marconi, Nelson [1, 2] ; Araujo, Eliane [3, 4, 5] ; Brancher, Marco Capraro [1, 2, 6] ; Porto, Tiago Couto [1, 2, 7]
Total Authors: 4
Affiliation:
[1] Getulio Vargas Fdn, Sao Paulo Sch Business Adm, Brazil FGV EAESP, Sao Paulo, SP - Brazil
[2] Ctr Studies New Developmentalism, Sao Paulo, SP - Brazil
[3] State Univ Maringa UEM, Maringa, Parana - Brazil
[4] Fed Univ Rio Grande do Sul PPGE UFRGS, Grad Program Econ, Porto Alegre, RS - Brazil
[5] Natl Council Sci & Technol Dev CNPq, Porto Alegre, RS - Brazil
[6] Harvard Kennedy Sch, Cambridge, MA - USA
[7] Getulio Vargas Fdn, Brazil FGV EAESP, Publ Adm & Governance, Sao Paulo, SP - Brazil
Total Affiliations: 7
Document type: Journal article
Source: CAMBRIDGE JOURNAL OF ECONOMICS; v. 45, n. 6, p. 1297-1318, NOV 2021.
Web of Science Citations: 0
Abstract

We analyse the hypothesis that variations in the income elasticities of the demand for exports and imports are influenced by the difference between the actual and industrial equilibrium levels of real effective exchange rates. The industrial equilibrium is defined as the exchange rate level that equalises real unit labour costs between local producers of manufactured goods and their trading partners. To test our hypothesis, based on data between 1995 and 2014 from the World Input-Output Database (WIOD), a sample of 43 countries was built. First, the actual and the industrial equilibrium real effective exchange rates were calculated; then, the income elasticities were estimated for each country during this period. A dynamic panel data model was adopted to estimate the relationship between these elasticities and the differences between those exchange rates. The results suggest that the magnitude of these differences modifies the income elasticities of trade, potentially contributing to structural change. (AU)

FAPESP's process: 19/01353-0 - The tendency to the cyclical overvaluation of the exchange rate and its relation with the rate of investment and the structural change in Latin American countries
Grantee:Luiz Carlos Bresser Gonçalves Pereira
Support Opportunities: Regular Research Grants