We examine the role of cross-border input linkages in governing how international relativeprice changes influence demand for domestic value added. We define a novel value-addedreal effective exchange rate (REER), which aggregates bilateral value-added price changes,and link this REER to demand for value added. Input linkages enable countries to gaincompetitiveness following depreciations by supply chain partners, and hence counterbalancebeggar-thy-neighbor effects. Cross-country differences in input linkages also imply that theelasticity of demand for value added is country specific. Using global input-output data, wedemonstrate these conceptual insights are quantitatively important and compute historicalvalue-added REERs.
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
Prices in red indicate formats that are not yet available but are forthcoming.