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Rethinking the Exchange Rate Impact on Trade in a World with Global Value Chains

Global value chains (GVCs) are a prominent feature of global production and trading systems. Using the OECD-WTO database on trade in value added, this paper examines the exchange rate elasticities of GVC-related exports and imports and compares them with elasticities for trade in traditonal goods. W...

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Published in:	International economic journal 2016, 30(2), , pp.204-216
Main Authors:	Cheng, Kevin C., Hong, Gee Hee, Seneviratne, Dulani, van Elkan, Rachel
Format:	Article
Language:	English
Subjects:	Beggars Depreciation Economic models Elasticity exchange rate elasticity Exports Foreign exchange rates Global value chains Imports International economic organizations International trade Production Supply Supply chains trade Trading Value added Value chain 경제학
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container_end_page	216
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container_title	International economic journal
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creator	Cheng, Kevin C. Hong, Gee Hee Seneviratne, Dulani van Elkan, Rachel
description	Global value chains (GVCs) are a prominent feature of global production and trading systems. Using the OECD-WTO database on trade in value added, this paper examines the exchange rate elasticities of GVC-related exports and imports and compares them with elasticities for trade in traditonal goods. We find that a real depreciation raises both the foreign and domestic value-added content of GVC-related exports. The size of these elasticities is found to be smaller when the import content of GVC exports is larger. Among the key policy implications of these results is that exchange rate changes by small contributors of value added have little effect on their own production or the production of their supply chain partners. On the other hand, large contributors to the value-added of the final product create spillovers to their smaller supply chain partners, obviating traditional beggar-thy-neighbor concerns.
doi_str_mv	10.1080/10168737.2016.1148418
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source	EconLit s plnými texty; EBSCOhost Business Source Ultimate; International Bibliography of the Social Sciences (IBSS); PAIS Index; Taylor and Francis Social Sciences and Humanities Collection
subjects	Beggars Depreciation Economic models Elasticity exchange rate elasticity Exports Foreign exchange rates Global value chains Imports International economic organizations International trade Production Supply Supply chains trade Trading Value added Value chain 경제학
title	Rethinking the Exchange Rate Impact on Trade in a World with Global Value Chains
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