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Sector Sensitivity to Exchange Rate Fluctuations

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Author Info
Michel Fouquin
Khalid Sekkat
J. Malek Mansour
Nanno Mulder
Laurence Nayman

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Abstract

The present study focuses on the impact of the euro/dollar fluctuations on the European manufacturing industries. It tries to classify European sectors according to the exposure to competition from the dollar zone and to their sensitivity to exchange rate fluctuations. Combining the results of the two classifications, sectors which may be highly affected by the euro/dollar fluctuations are identified. Exposure to the dollar zone is measured in a way that takes into account both competition by imports in the Single European Market, as well as competition to exports in the dollar zone and in third markets. The study shows strong asymmetries among European countries. To estimate sectors' sensitivity to exchange rate fluctuations, the regression relates trade volumes to exchange rate, cost and market structure variables. The estimation results evidence that cost considerations and exchange rates are important determinants of trade. The impact of exchange rate changes on trade varies across sectors. They are explained by concentration on the supply side and dynamics on the demand side.

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Paper provided by CEPII research center in its series Working Papers with number 2001-11.

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Date of creation: Nov 2001
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Handle: RePEc:cii:cepidt:2001-11

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Related research
Keywords: Exchange rates; euro; dollar; manufacturing sector production; trade;

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Find related papers by JEL classification:
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F31 - International Economics - - International Finance - - - Foreign Exchange

References listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Catherine Boemare & Philippe Quirion, 2002. "Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences," Post-Print halshs-00007264_v1, HAL. [Downloadable!]
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  2. Sarah Guillou, 2006. "Competitiveness and export market shares in high tech industries in the US and the EMU countries: a comparative study," Documents de Travail de l'OFCE 2006-18, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  3. Keith Head & Thierry Mayer, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center. [Downloadable!]
  4. Rakhsat Sleiman, 2002. "Projections demographiques de quelques pays de l'Union européenne (Allemagne, France, Italie, Royaume-Uni, Pays-Bas, Suede)," Working Papers 2002-13, CEPII research center. [Downloadable!]
  5. Balazs Egert & Amina Lahreche-Revil & Kirsten Lommatzsch, 2004. "The Stock-Flow Approach to the Real Exchange Rate of CEE Transition Economies," Working Papers 2004-15, CEPII research center. [Downloadable!]
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