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Sectoral real exchange rates and manufacturing exports: A case study of Latin America

Serie

  • Documentos de Trabajo CIEF

Resumen

  • Standard theory considers the real exchange rate (RER) as export determinant. A common limitation of cross-country evidence is the use of effective (REER) or bilateral (BRER) RER indices, both of which have the same values across sectors. The novel contributions of this paper are a variety of goods trade model, to exploit cross-sector variations by constructing a unique sectoral bilateral RER index (SBRER) for 12 Latin American countries, 21 sectors and 38 trade partners, and to estimate the effect of RER movements on manufacturing exports during 2001-2018. The results show that the SBRER is a significant determinant of aggregate manufacturing exports, whereas the REER and BRER appear not to be significant. Sectoral export elasticities moreover indicate that in Latin America mainly low-technology sectors are affected by RER movements. Overall these findings indicate that sectoral differences matter and provide new evidence on the effect of RER movements on Latin American exports.

fecha de publicación

  • 2021

Líneas de investigación

  • Latin America
  • Manufacturing Exports
  • Product Complexity
  • Real Exchange Rate
  • Trade

Issue

  • 19286