The Effect of Exchange Rate Changes on Germany's Exports
AbstractGermany's nominal exchange rate has remained weaker because it is linked to weaker eurozone economies. Germany's real exchange rate also depreciated vis-�-vis eurozone countries after 2000 because German firms and workers controlled unit labor costs. This paper investigates how exchange rate changes affect German exports. Results from Johansen maximum likelihood and dynamic ordinary least squares (DOLS) estimation indicate that the export elasticity for the unit labor cost-deflated exchange rate equals 0.6. Results from panel DOLS estimation indicate that price elasticities are much higher for consumption goods exports than for capital goods exports and for exports to the eurozone than for exports outside of it. These results imply that Germany's internal devaluation after 2000 contributed to a surge in exports to Europe.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12081.
Length: 31 pages
Date of creation: Dec 2012
Date of revision:
Contact details of provider:
Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901
Web page: http://www.rieti.go.jp/
More information through EDIRC
This paper has been announced in the following NEP Reports:
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.:
- Jarkko Turunen & Richard T. Harmsen & Tamim Bayoumi, 2011. "Euro Area Export Performance and Competitiveness," IMF Working Papers 11/140, International Monetary Fund.
- International Monetary Fund, 2005. "France, Germany, Italy, and Spain: Explaining Differences in External Sector Performance Among Large Euro Area Countries," IMF Staff Country Reports 05/401, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko).
If references are entirely missing, you can add them using this form.