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Real exchange rate and export surge episodes: What sectors take advantage of the real exchange rate stimulus?

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  • Palazzo, Gabriel

Abstract

What are the main characteristics of sectors that take advantage of the real exchange rate stimulus after a large and long-lasting devaluation? We aim to answer this question by analyzing the development of export sectors in Argentina during 2003–2008, after the crisis and large devaluation of 2002. This six-year period shows the highest number of sectors with export surge episodes from 1980 to 2015. We find, first, that the probability of export surge episodes increased 2.5% by each standard deviation of the higher labor intensity index during the large and long-lasting devaluation period because non-tradable costs prevail in their production function. Second, we show that export surges are more likely to occur in sectors related to already competitive sectors (mainly upstream sectors). Finally, the new export volumes in those sectors show persistent dynamics despite the end of the period of currency competitiveness, a signal of trade hysteresis.

Suggested Citation

  • Palazzo, Gabriel, 2024. "Real exchange rate and export surge episodes: What sectors take advantage of the real exchange rate stimulus?," Structural Change and Economic Dynamics, Elsevier, vol. 68(C), pages 446-467.
    • Handle: RePEc:eee:streco:v:68:y:2024:i:c:p:446-467
    DOI: 10.1016/j.strueco.2023.11.009
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    More about this item

    Keywords

    Real exchange rates; Developing countries; Productive structure; Hysteresis;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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