Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities

Global value chain participation affects the exchange rate pass-through to export prices and export volumes. The paper develops a partial equilibrium model of international trade with cross-border production and shows that higher participation in g...

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Main Authors:	de Soyres, Francois, Frohm, Erik, Gunnella, Vanessa, Pavlova, Elena
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	GLOBAL VALUE CHAINS EXPORT ELASTICITY CURRENCY UNION EXCHANGE RATES EXPORT COMPETITIVENESS SUBSTITUTION
Online Access:	http://documents.worldbank.org/curated/en/816441531511812643/Bought-sold-and-bought-again-the-impact-of-complex-value-chains-on-export-elasticities http://hdl.handle.net/10986/30070

id	okr-10986-30070
recordtype	oai_dc
spelling	okr-10986-300702021-06-08T14:42:46Z Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities de Soyres, Francois Frohm, Erik Gunnella, Vanessa Pavlova, Elena GLOBAL VALUE CHAINS EXPORT ELASTICITY CURRENCY UNION EXCHANGE RATES EXPORT COMPETITIVENESS SUBSTITUTION Global value chain participation affects the exchange rate pass-through to export prices and export volumes. The paper develops a partial equilibrium model of international trade with cross-border production and shows that higher participation in global value chains reduces the elasticities. Specifically, a higher share of foreign value added in exports reduces the exchange rate pass-through to export prices and export volumes. A greater share of exports that return as imports also reduces the responsiveness of export volumes to changes in bilateral exchange rates. Finally, exports of inputs that are further re-exported increase the responsiveness to the trading partner's effective exchange rate. Using a novel sector-level panel dataset with 40 countries, the analysis tests and finds strong empirical support for the theoretical predictions. The paper further shows that some sectors in some countries can even experience a decline in gross exports when their currency depreciates. 2018-07-30T20:51:49Z 2018-07-30T20:51:49Z 2018-07 Working Paper http://documents.worldbank.org/curated/en/816441531511812643/Bought-sold-and-bought-again-the-impact-of-complex-value-chains-on-export-elasticities http://hdl.handle.net/10986/30070 English Policy Research Working Paper;No. 8535 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	GLOBAL VALUE CHAINS EXPORT ELASTICITY CURRENCY UNION EXCHANGE RATES EXPORT COMPETITIVENESS SUBSTITUTION
spellingShingle	GLOBAL VALUE CHAINS EXPORT ELASTICITY CURRENCY UNION EXCHANGE RATES EXPORT COMPETITIVENESS SUBSTITUTION de Soyres, Francois Frohm, Erik Gunnella, Vanessa Pavlova, Elena Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities
relation	Policy Research Working Paper;No. 8535
description	Global value chain participation affects the exchange rate pass-through to export prices and export volumes. The paper develops a partial equilibrium model of international trade with cross-border production and shows that higher participation in global value chains reduces the elasticities. Specifically, a higher share of foreign value added in exports reduces the exchange rate pass-through to export prices and export volumes. A greater share of exports that return as imports also reduces the responsiveness of export volumes to changes in bilateral exchange rates. Finally, exports of inputs that are further re-exported increase the responsiveness to the trading partner's effective exchange rate. Using a novel sector-level panel dataset with 40 countries, the analysis tests and finds strong empirical support for the theoretical predictions. The paper further shows that some sectors in some countries can even experience a decline in gross exports when their currency depreciates.
format	Working Paper
author	de Soyres, Francois Frohm, Erik Gunnella, Vanessa Pavlova, Elena
author_facet	de Soyres, Francois Frohm, Erik Gunnella, Vanessa Pavlova, Elena
author_sort	de Soyres, Francois
title	Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities
title_short	Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities
title_full	Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities
title_fullStr	Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities
title_full_unstemmed	Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities
title_sort	bought, sold, and bought again : the impact of complex value chains on export elasticities
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/816441531511812643/Bought-sold-and-bought-again-the-impact-of-complex-value-chains-on-export-elasticities http://hdl.handle.net/10986/30070
_version_	1764471130881523712

Bought, Sold, and Bought Again : The Impact of Complex Value Chains on Export Elasticities

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