Date: 2018
Type: Article
Backward participation in global value chains and exchange rate driven adjustments of Swiss exports
Review of world economics, 2018, Vol. 154, No. 3, pp. 537-584
FAUCEGLIA, Dario, LASSMANN, Andrea, SHINGAL, Anirudh, WERMELINGER, Martin, Backward participation in global value chains and exchange rate driven adjustments of Swiss exports, Review of world economics, 2018, Vol. 154, No. 3, pp. 537-584
- https://hdl.handle.net/1814/59975
Retrieved from Cadmus, EUI Research Repository
This paper examines the effect of exchange rate movements on export volume, export revenues and propensity to export taking into account the extent of foreign value added content of exports (backward integration) in global value chains (GVCs). Using both product-level and firm-level panel data, our results suggest that Swiss exports (intensive margin) and the export probability (extensive margin) are negatively affected by a currency appreciation. However, this adverse effect is mitigated in sectors and firms that are more integrated in GVCs, which could be explained by the natural hedging of exchange rate movements. Our findings are robust to the use of different measures of natural hedging and GVC integration and also hold across various specifications and estimation methods that control for sample selection, firm heterogeneity, heteroskedastic errors and persistence in export behavior. The dynamic specifications also reveal that export hysteresis driven by a currency appreciation is a concern particularly for firms that are not established in export markets.
Additional information:
First online: 05 March 2018
Cadmus permanent link: https://hdl.handle.net/1814/59975
Full-text via DOI: 10.1007/s10290-018-0310-z
ISSN: 1610-2878; 1610-2886
Publisher: Springer (part of Springer Nature)
Keyword(s): International trade Exchange rates Global value chains Gravity equation Exchange rate pass-through International-trade Models Entry Firms Selection Gravity Costs
Sponsorship and Funder information:
Swiss State Secretariat for Economic Affairs (SECO)
Files associated with this item
Files | Size | Format | View |
---|---|---|---|
There are no files associated with this item. |