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The Real Exchange Rate and Export Growth: Are Services Different?

  • Eichengreen, Barry

    ()

    (University of California)

  • Gupta, Poonam

    ()

    (National Institute of Public Finance and Policy)

We consider the determinants of exports of services, distinguishing between modern and traditional services. We consider both the growth of export volumes and so-called export surges-periods of rapid sustained export growth. We ask whether the determinants of export growth rates and surges differ between merchandise, traditional services and modern services and whether developing countries are different. Our findings confirm the importance of the real exchange rate for export growth. We find that the effect of the real exchange rate is even stronger for exports of services than exports of goods; it is especially strong for exports of modern services. While the evidence of differential effects between advanced and developing countries is weaker, our results nonetheless suggest that as developing countries shift from exporting primarily commodities and merchandise to exporting traditional and modern services in the course of their development, appropriate policies toward the real exchange rate become even more important.

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File URL: http://www.nipfp.org.in/newweb/sites/default/files/WP_2012_112.pdf
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Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 12/112.

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Length: 44
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:npf:wpaper:12/112
Note: Working Paper 112, 2012
Contact details of provider: Web page: http://www.nipfp.org.in

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  1. Haddad, Mona & Pancaro, Cosimo, 2010. "Can Real Exchange Rate Undervaluation Boost Exports and Growth in Developing Countries? Yes, But Not for Long," World Bank - Economic Premise, The World Bank, issue 20, pages 1-5, June.
  2. Ingo Borchert & Aaditya Mattoo, 2009. "The Crisis Resilience of Services Trade," World Bank Other Operational Studies 11123, The World Bank.
  3. Arvind Subramanian & Jonathan David Ostry & Simon Johnson, 2007. "The Prospects for Sustained Growth in Africa; Benchmarking the Constraints," IMF Working Papers 07/52, International Monetary Fund.
  4. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
  5. Yin-wong Cheung & Menzie D. Chinn & Eiji Fujii, 2006. "The Illusion of Precision and the Role of the Renminbi in Regional Integration," Working Papers 182006, Hong Kong Institute for Monetary Research.
  6. Luis Servén, 2003. "ERRATUM: Real-Exchange-Rate Uncertainty and Private Investment in LDCs," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 492-492, May.
  7. Luis Servén, 2003. "Real-Exchange-Rate Uncertainty and Private Investment in LDCS," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 212-218, February.
  8. Nicolas Berman & Philippe Martin & Thierry Mayer, 2012. "How do Different Exporters React to Exchange Rate Changes?," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 437-492.
  9. Gupta, Poonam & Mishra, Deepak & Sahay, Ratna, 2007. "Behavior of output during currency crises," Journal of International Economics, Elsevier, vol. 72(2), pages 428-450, July.
  10. Freund, Caroline & Pierola, Martha Denisse, 2012. "Export surges," Journal of Development Economics, Elsevier, vol. 97(2), pages 387-395.
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