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Exchange rate fluctuations and extra-eurozone exports: A comparison of Germany and France

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  • Serge Rey

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

Abstract

To study the extra-eurozone exports of goods by France and Germany, this study applies cointegration methods to estimate long-run equations for the period 1971–2010 (quarterly data), as well as for a shorter period known as the "euro period." Various measures of the real exchange rate of the euro indicate that the price elasticities of exports are higher for France (-0.6 to -0.9) than for Germany (-0.2 to -0.3). Conversely, the income elasticities of German exports are double those of France, reaching nearly 2 for 1 in the French case. These results support French fears about the value of the euro–dollar exchange rate, but they also reveal a delay by France in its adaptation to the new global environment, following the opening of the central and eastern European economies and the arrival of large emerging countries in the worldwide economy.

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  • Serge Rey, 2011. "Exchange rate fluctuations and extra-eurozone exports: A comparison of Germany and France," Post-Print hal-01885303, HAL.
    • Handle: RePEc:hal:journl:hal-01885303
    Note: View the original document on HAL open archive server: https://univ-pau.hal.science/hal-01885303
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    References listed on IDEAS

    as
    1. Saikkonen, Pentti & Lütkepohl, Helmut, 2000. "Testing For The Cointegrating Rank Of A Var Process With An Intercept," Econometric Theory, Cambridge University Press, vol. 16(3), pages 373-406, June.
    2. Saikkonen, Pentti & Lütkepohl, Helmut, 2002. "Testing For A Unit Root In A Time Series With A Level Shift At Unknown Time," Econometric Theory, Cambridge University Press, vol. 18(2), pages 313-348, April.
    3. Saikkonen, Pentti & Lutkepohl, Helmut, 2000. "Testing for the Cointegrating Rank of a VAR Process with Structural Shifts," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(4), pages 451-464, October.
    4. Stephan Danninger & Fred Joutz, 2008. "What Explains Germany's Rebounding Export Market Share?," CESifo Economic Studies, CESifo Group, vol. 54(4), pages 681-714, December.
    5. Lütkepohl,Helmut & Krätzig,Markus (ed.), 2004. "Applied Time Series Econometrics," Cambridge Books, Cambridge University Press, number 9780521547871, September.
    6. Hans‐Werner Sinn, 2006. "The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle," The World Economy, Wiley Blackwell, vol. 29(9), pages 1157-1175, September.
    7. McKenzie, Michael D. & Brooks, Robert D., 1997. "The impact of exchange rate volatility on German-US trade flows," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 7(1), pages 73-87, April.
    8. Lutkepohl, Helmut & Saikkonen, Pentti, 2000. "Testing for the cointegrating rank of a VAR process with a time trend," Journal of Econometrics, Elsevier, vol. 95(1), pages 177-198, March.
    9. Lütkepohl,Helmut & Krätzig,Markus (ed.), 2004. "Applied Time Series Econometrics," Cambridge Books, Cambridge University Press, number 9780521839198, September.
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    Cited by:

    1. Couharde, Cécile & Sallenave, Audrey, 2013. "How do currency misalignments’ threshold affect economic growth?," Journal of Macroeconomics, Elsevier, vol. 36(C), pages 106-120.

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    More about this item

    Keywords

    Exports; Euro; Germany; France; Unit roots; Breaks; Cointegration;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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