The Interaction of Market Structures and External Exposure Effects on Profit Margins: An Empirical Analysis of Taiwan
This paper investigates the relationship between exchange rate and profit margins when we take the effect of exchange rate on both input and output prices into account. Using the data of 19 two-digit Taiwanese manufacturing industries over the period of 1981-1994, we find a higher degree of net export exposure in Taiwan. Our empirical results suggest that since the 1987 appreciation of the Taiwanese currency, industries take advantage of the appreciation of the NT dollar, enjoying a reduction in the price of imported inputs into production. The market structures, such as market concentration and products are destined for domestic versus export markets, are showed that the profit margins are affected. An innovative feature of the paper is in modeling the interaction between endogenous Northern product innovation and endogenous production transfers to South with industry specific learning, cross-industry learning spillovers, and product obsolescence. Greater difficulty in adopting new products raises wage inequality while lowering Northern innovation and Southern learning rates. Slowing the pace of product obsolescence reduces wage inequality in the short run, but does the opposite in the long run.
Volume (Year): 27 (2002)
Issue (Month): 1 (June)
|Contact details of provider:|| Web page: http://www.jed.or.kr/|
More information through EDIRC
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.:
- Campa, Jose Manuel & Goldberg, Linda S, 1999.
"Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 287-314, May.
- Jose Campa & Linda S. Goldberg, 1995. "Investment, Pass-Through and Exchange Rates: A Cross-Country Comparison," NBER Working Papers 5139, National Bureau of Economic Research, Inc.
- Jose Campa & Linda S. Goldberg, 1996. "Investment, pass-through, and exchange rates: a cross-country comparison," Staff Reports 14, Federal Reserve Bank of New York.
- Campa, Jose & Goldberg, Linda, 1995. "Investment, Pass-Through and Exchange-Rates: A Cross-Country Comparison," Working Papers 95-14, C.V. Starr Center for Applied Economics, New York University.
- Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
When requesting a correction, please mention this item's handle: RePEc:jed:journl:v:27:y:2002:i:1:p:107-123. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Changhui Kang)
If references are entirely missing, you can add them using this form.