DP4158 What Happened to Asian Exports During the Crisis?

Author(s): Rupa Duttagupta, Antonio Spilimbergo
Publication Date: December 2003
Keyword(s): co-integration, competitive depreciation, east asia, export demand and supply
JEL(s): F10, F14
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4158

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.