Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228092
Authors: 
Fisera, Boris
Horváth, Roman
Year of Publication: 
2020
Series/Report no.: 
IES Working Paper No. 10/2020
Abstract: 
We evaluate the effect of exchange rate misalignments on the balance of trade and the role that global value chain participation plays in this effect for 11 new European Union member states. Using heterogeneous panel cointegration methods, we first estimate the real equilibrium exchange rate and detect episodes of currency misalignment. We find asymmetric effects of real currency misalignments: overvaluation has a negative effect, but undervaluation has no effect on the trade balance. Additionally, we find that global value chain participation weakens the effect of currency misalignments on the balance of trade. Therefore, our results suggest that globalization reduces the role of exchange rates in stimulating the domestic economy.
Subjects: 
Balance of trade
exchange rates
global value chains
export sophistication
panel cointegration
JEL: 
F31
F32
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.