Real Exchange Rate Overvaluation and WTO Dispute Initiation in Developing Countries

Betz, Timm; Kerner, Andrew

doi:10.1017/s0020818316000278

Cited by 13 publications

(7 citation statements)

References 60 publications

(51 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…43. This indicator is widely used in the international political economy and trade literature; see, for example, Betz and Kerner 2016;Jensen, Quinn, and Weymouth 2015;Steinberg 2015. observation is zero. Since advanced industrial countries generally have more overvalued real currencies even after controlling for wealth, we estimate and explore separate samples for OECD member and nonmember democracies (as of 1986).…”

Section: Computing Rer Valuationsmentioning

confidence: 99%

See 1 more Smart Citation

Do Exchange Rates Influence Voting? Evidence from Elections and Survey Experiments in Democracies

Quinn,

Sattler,

Weymouth

2023

Int Org

View full text Add to dashboard Cite

Intense debate surrounds the effects of trade on voting, yet less attention has been paid to how fluctuations in the real exchange rate may influence elections. A moderately overvalued currency enhances consumers’ purchasing power, yet extreme overvaluation threatens exports and economic growth. We therefore expect exchange rates to have a conditional effect on elections: when a currency is undervalued, voters will punish incumbents for further depreciations; yet when it is highly overvalued, they may reward incumbents for depreciation. We empirically explore our argument in three steps. First, we examine up to 412 elections in up to 59 democratic countries and show that voters generally punish depreciation in the real exchange rate when the currency is undervalued. We also find that at extremely high levels of currency overvaluation, voters sometimes reward incumbents for depreciation. A currency peg, especially in the eurozone, appears to insulate incumbents from these effects. In a second step, we explore the microfoundations of the election results through survey experiments in three advanced industrialized and two emerging market nations with different monetary and exchange rate policies and institutions. Respondents in countries with undervalued to mildly overvalued currencies disapprove of currency depreciations, whereas those facing a very highly overvalued currency favor depreciation. Third, we examine the mechanism of political competition in exchange rate policymaking and demonstrate that sustained undervaluation is rare in countries with strong political competition. Democratic governments have electoral incentives to avoid using undervalued currencies as a means of shielding workers from import competition.

show abstract

Section: Computing Rer Valuationsmentioning

confidence: 99%

“…43.This indicator is widely used in the international political economy and trade literature; see, for example, Betz and Kerner 2016; Jensen, Quinn, and Weymouth 2015; Steinberg 2015.…”

mentioning

confidence: 99%

Do Exchange Rates Influence Voting? Evidence from Elections and Survey Experiments in Democracies

Quinn,

Sattler,

Weymouth

2023

Int Org

View full text Add to dashboard Cite

show abstract

“…I begin testing this causal path by assessing oil's effect on exchange rates using a time‐series cross‐section (TSCS) sample with data for about 130 countries collected annually between 1990 and 2014 . The dependent variable is real effective exchange rate overvaluation , which I measure according to the approach outlined by Rodrik () and Betz and Kerner (). The measurement starts by calculating the logarithm of the real effective exchange rate:

logREER = log ({XRATE}_{i, t} / {PPP}_{i, t}),

where XRATE is the nominal exchange rate between country i and the U.S. dollar and PPP is the GDP purchasing power parity conversion factor.…”

Section: Evaluating the Mechanismsmentioning

confidence: 99%

“…The measurement starts by calculating the logarithm of the real effective exchange rate:

logREER = log ({XRATE}_{i, t} / {PPP}_{i, t}),

where XRATE is the nominal exchange rate between country i and the U.S. dollar and PPP is the GDP purchasing power parity conversion factor. However, Rodrik () and Betz and Kerner () recommend removing from logREER the Balassa–Samuelson effect—the tendency for exchange rates to appreciate in richer countries—by regressing logREER on per capita GDP and year fixed effects, then calculating:

Overvalued = - 1 * (logREER - \overset{true^}{logREER}),

where

\overset{logREER}{true}

are the predicted values from the regression . I follow this approach, so Overvalued from Equation is the dependent variable in the exchange rates regressions presented below.…”

Section: Evaluating the Mechanismsmentioning

confidence: 99%

Does oil substitute for patriarchy?

Simmons

2018

Economics & Politics

View full text Add to dashboard Cite

Critics of Ross's (American Political Science Review, 102, 2008, 107) gendered resource curse thesis argue that culture trumps oil wealth as a determinant of female labor force participation (FLFP). Here, I argue that, while cultural attributes do indeed affect the female labor supply, oil wealth reduces the demand for female labor by hurting the export‐oriented industries that employ female labor intensively. By reducing the demand for female labor in this way, oil wealth undermines the positive effect of gender egalitarianism on FLFP. Thus, oil curses women. Using data from the World Values Survey and the World Bank, I find support for the argument.

show abstract

“…Private companies cannot directly become members of a trade dispute, and they are excluded from the process according to WTO regulations [1]. By initiating trade disputes, the government signals to enterprises that it supports them (Betz and Kerner, 2016). The choice of the optimal strategy for participating in a trade dispute and the ensuing result determine the level of trust between the government and economic agents participating in international trade.…”

Section: Introductionmentioning

confidence: 99%

Assessing the possibility of winning a WTO dispute before being involved

Klishch

Larionov

2022

JEFAS

View full text Add to dashboard Cite

PurposeThis article focuses on whether there is a chance to win a World Trade Organization (WTO) trade dispute at the consultation stage. The study suggests an approach to resolving trade disputes on a bilateral level before involving formal WTO resolution procedures.Design/methodology/approachThe model describes the determinants of the probability of winning a trade dispute. The econometric model estimates two different groups of factors available during the consultation period – macroeconomic factors and the institutional features of the trade dispute, such as the number of third parties. The data includes WTO trade disputes from 1995 to 2014.FindingsThe suggested model predicts the result of trade disputes with a probability of 76.64%. The research proves that institutional factors such as the number of third parties and the subject of the trade dispute influence the probability of winning.Practical implicationsThe results of the study help predict the probability of winning a trade dispute at the consultation stage so that countries can decide whether to pursue a trade dispute.Originality/valueThe research presents several new hypotheses on the results of trade disputes. The authors show that the higher the number of countries involved, the higher the chance of the complainant winning and that if major parties such as the US or the European Union (EU) are involved as third parties, the chance of the complainant winning increases.

show abstract

Real Exchange Rate Overvaluation and WTO Dispute Initiation in Developing Countries

Cited by 13 publications

References 60 publications

Do Exchange Rates Influence Voting? Evidence from Elections and Survey Experiments in Democracies

Do Exchange Rates Influence Voting? Evidence from Elections and Survey Experiments in Democracies

Does oil substitute for patriarchy?

Assessing the possibility of winning a WTO dispute before being involved

Contact Info

Product

Resources

About