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ID:
125812
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2013.
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| Summary/Abstract |
Electric power has traditionally been classified as a non-traded good, produced and consumed within the country of origin. More recently, electricity has been traded across national borders and in certain cases, viz., Bhutan, has been the dominant export; in other situations, it is used to repay debts owed to neighboring countries. This paper investigates the role of electricity as the primary export, analyzes its valuation, and then goes on to evaluate the impact on the terms of trade. We conclude that in the medium-term, the electric power exporting economy would be better off developing its manufacturing sector to diversify its exposure and to protect its trade interests.
The case of Bhutanese hydro-electricity exports to India is studied and the change in trade advantage with every increase in power tariff is ascertained. It is found that a 1.26% annual increase in (non-food) consumer prices is correlated with a 1% increase in electricity export tariff. While the causality from electric power tariff to Indian manufactures prices is not established statistically, a change in manufactures prices feeding back into consumer prices in Bhutan is statistically significant. Suggestions are offered for Bhutan to reduce dependence on Indian imports and to diversify its export market exposure.
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| 2 |
ID:
161559
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| Summary/Abstract |
Existing theories on real exchange rates predict a significant undervaluation of the Korean won (KRW) in the early and mid-1990s. The paper demonstrates why this expectation did not materialize and instead an unprecedentedly large degree of overvaluation took place. Focusing on three variables, namely, financial repression, devaluation pass-through, and policy exhibitionism, the paper examines how the unraveling of the developmental state eventually gave rise to the 1990s’ overvaluation. It argues that the policy exhibitionism of the new civilian government amplified the influence of Chaebol on monetary policies, which in turn created a strong appreciative force to KRW. It also contends that the increasing exchange rate pass-through onto the prices of imported intermediate goods explains why Chaebol did not desire to tame the excessive appreciative trend despite its detrimental effect on their exports. The paper offers policy implications for other state-led, emerging economies.
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| 3 |
ID:
082895
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2008.
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| Summary/Abstract |
A bilateral export demand function is used to estimate the effects on the Chinese bilateral exports of three real exchange rates: (1) bilateral real exchange rate capturing the price-competitiveness of the Chinese products in the market of the considered import country (traditional effect); (2) real effective exchange rate capturing the price-competitiveness of the goods of Chinese competitors in the same market (third-export-country effect); (3) real effective exchange rate capturing the price-competitiveness of the Chinese products in China's other export markets (third-import-country effect). This function is applied for the Chinese bilateral real exports towards 11 industrialized countries over the period from 1991 to 2004. The econometric results confirm the effects of the three real exchange rates, as well as the effects of the demand from developed countries.
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