A Cross-national Panel Study of Devaluations on Disaggregated Export Sectors: A Case for Sector Specific Policies

The focus of this paper is a global examination of how different export sectors react to real devaluations in the short term. The disaggregated nature of the data allows a closer analysis of the underlying cross-export differences in exchange rate movements. Current period real devaluation has contractionary effects on real exports in 80 per cent of specific export sectors and affects a variety of industries without distinction as to whether products incorporate more added value or less added value. Therefore, sector specific policy solutions are more advisable than implementing a uniform devaluation on a country’s export portfolio. We gathered export data from 67 countries around the world across 65 export sectors at the two-digit SITC level. Exports are in US dollars and are by country to the world. These together with the consumer price indices and exports unit value indices belong to the United Nations Common Database for the years 1976-2006.