Article
| Vox, CEPR Policy Portal
You Can't Always Get What You Want: The Real Exchange Rate and Manufacturing Performance in a World of Global Value Chains
by
Laura Alfaro, Alejandro Cuñat, Harald Fadinger and Yanping Liu
|
Abstract
Real exchange rate devaluations are typically seen as a viable development strategy, but the effectiveness of the approach may vary over time and across countries. This column explores this issue by focusing on the microeconomics of firm-level responses to exchange rate fluctuations. Results show varying patterns of responses to fluctuations by region and by import/export orientation. These results highlight the crucial role of a firm’s integration in global value chains.
Keywords: manufacturing performance;
Real exchange rate;
Global value chains;
Economics;
Production;
Performance;