Working Paper: CEPR ID: DP4158
Authors: Rupa Duttagupta; Antonio Spilimbergo
Abstract: After the large exchange rate depreciations following the 1997 East Asian crisis, export volumes from East Asian countries responded with a notable lag. Two main explanations for this lag have been proposed: that contraction in domestic credit affected supply of exports; and that ?competitive depreciation? by other countries neutralized the effects on demand for exports. This Paper considers the plausibility of these two mechanisms using a new monthly database on exports of selected industries. The results indicate that ?competitive depreciation? played an important role in the propagation of the East Asian crisis through the trade channel, even at a monthly frequency.
Keywords: Cointegration; Competitive Depreciation; East Asia; Export Demand; Supply
JEL Codes: F10; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| competitive depreciation (D25) | demand for East Asian exports (N15) |
| domestic credit contraction (E51) | supply of exports (F10) |
| competitive depreciation (D25) | export prices (F14) |
| competitive depreciation (D25) | export demand (F10) |