Exchange Rates and Export Structure

33 Pages Posted: 6 Aug 2014

See all articles by Wen-Tai Hsu

Wen-Tai Hsu

Singapore Management University

Yi Lu

National University of Singapore (NUS) - Department of Economics

Yingke Zhou

National University of Singapore (NUS); International Monetary Fund (IMF)

Date Written: July 31, 2014

Abstract

This paper studies whether changes in the exchange rate affect a country’s export structure, using an arguably exogenous sudden appreciation of renminbi on July 21, 2005 as the main source of identification. Employing combined regression discontinuity and difference-in-differences approach, we show that China’s export structure became more similar to that of the developed countries after the currency appreciation. We also find that the majority of the appreciation effect comes from the inter-firm resource reallocation rather than the inter-region or intra-firm resource reallocation.

Keywords: export structure, currency appreciation, regression discontinuity design, difference-in-differences estimation, China’s exchange-rate reform, resource reallocation

JEL Classification: F31; F14; D22

Suggested Citation

Hsu, Wen-Tai and Lu, Yi and Zhou, Yingke, Exchange Rates and Export Structure (July 31, 2014). Available at SSRN: https://ssrn.com/abstract=2475951 or http://dx.doi.org/10.2139/ssrn.2475951

Wen-Tai Hsu

Singapore Management University ( email )

90 Stamford Road
178903
Singapore
178903 (Fax)

HOME PAGE: http://wthsu.weebly.com

Yi Lu

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore
65-65166834 (Phone)

HOME PAGE: http://ylu6.weebly.com

Yingke Zhou (Contact Author)

National University of Singapore (NUS)

Department of Economics, AS2 Level 6, 1 Arts Link
National University of Singapore
Singapore, 117570
Singapore

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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