Journal article

Publication year: 2016

Pages: 1005-1017

Journal: Applied Economics

Volume number: 48

Issue number: 11

ISSN: 0003-6846

eISSN: 1466-4283

DOI Link: https://doi.org/10.1080/00036846.2015.1090557

Publisher: Taylor and Francis Group

Abstract: 
This article uses a nonlinear autoregressive distributed lag (NADRL) model introduced by Shin, Yu, and Greenwood-Nimmo (2014) to assess the role that the exchange rate plays in shaping European agri-food exports after the introduction of the Euro. Although the 10 countries of this study share the same currency (and thus a single nominal exchange rate with the US), cross-country discrepancies of exports' reactions to exchange rate changes are evident. Moreover, I find that exchange rate changes influence exports asymmetrically in the long run. Euro appreciations are harmful to a lesser extent than Euro depreciations are beneficial for European agri-food exports. The magnitude of this effect is country-specific and varies considerably between individual exporting countries. Exported quantities are less affected by exchange rate fluctuations than export values, which is in line with local currency price stabilization strategies of the exporters. This finding is interpreted as a sign of an incomplete exchange rate pass-through due to strategic (asymmetric) markup adjustments by firms with heterogeneous productivity. Besides that, the outcomes suggest that nonprice competition might be in play in some cases.

Harvard Citation style: Fedoseeva, S. (2016) Same currency, different strategies? The (asymmetric) role of the exchange rate in shaping European agri-food exports, Applied Economics, 48(11), pp. 1005-1017. https://doi.org/10.1080/00036846.2015.1090557

APA Citation style: Fedoseeva, S. (2016). Same currency, different strategies? The (asymmetric) role of the exchange rate in shaping European agri-food exports. Applied Economics. 48(11), 1005-1017. https://doi.org/10.1080/00036846.2015.1090557