ノリーテニス

This page uses Javascript. Please enable Javascript in your browser. Skip to Content Japanese English Chinese About RIETI Site Map Help Contact Discussion Papers Search Site Search Menu Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Projects Survey Fellows According to Title Alphabetical order RIETI Alumni Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles in Journals Research Digest Discussion Papers Search Publications RIETI Books (English) RIETI Books (Japanese) History of Japan's Trade and Industry Policy Authors' Words Other Publications (English) Other Publications (Japanese) Events Symposiums Workshops BBL Seminars Archived Seminar Series Data JIP Database R-JIP Database CIP Database Industry-Specific Nominal and Real Effective Exchange Rates AMU and AMU Deviation Indicators JSTAR RIETI-TID RIETI FDI Database ICPA Project Links Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal (METI Journal) Research Areas Fellows Research/Policy Papers Publications Events Data Articles Site Map Technical Issues Coontact Discussion Papers Search Close HomeResearch/Policy PapersNon Technical Summaries Non Technical Summary The Effect of Exchange Rate Changes on Germany's Exports Print Author Name THORBECKE, Willem (Senior Fellow, RIETI) / KATO Atsuyuki (Waseda University) 　　　　 Research Project East Asian Production Networks and Global Imbalances Download / Links Discussion Papers:12-E-081 [PDF:541KB] 　　　　 This Non Technical Summary does not constitute part of the above-captioned Discussion Paper but has been prepared for the purpose of providing a bold outline of the paper, based on findings from the analysis for the paper and focusing primarily on their implications for policy. For details of the analysis, read the captioned Discussion Paper. Views expressed in this Non Technical Summary are solely those of the individual author(s), and do not necessarily represent the views of the Research Institute of Economy, Trade and Industry (RIETI). International Macroeconomics Program (FY2011-FY2015) East Asian Production Network and Global Imbalances Project Germany's exchange rate has been held down because it is linked to weaker eurozone economies. How does this affect its exports? Results in the paper indicate that there is a very precise relationship between Germany's unit labor cost (ULC)-deflated exchange rate and its exports. A 10% appreciation of the exchange rate will reduce exports by 6%. Results also indicate that consumption goods exports respond more to exchange rate changes than do capital goods exports and that exports to other eurozone countries respond more to exchange rate changes compared to exports outside the eurozone. Since eurozone countries share a common currency, changes in the ULC-deflated exchange rate can only come about through changes in ULC. Figure 1 shows ULC in Germany and in other eurozone countries between 2000 and 2011. For most of these countries, ULC increased by 20% to 30% over this period, but for Germany, it increased by less than 3%. Germany's ULC-deflated exchange rate thus depreciated significantly relative to its European trading partners' exchange rates. The results imply that this large internal devaluation by Germany after adopting the euro increased capital and consumption goods exports from Germany to Europe in particular. German exports to the eurozone increased 61% for capital goods and 96% for consumption goods between 2000 and 2010. This surge in exports in turn contributed to large trade surpluses in Germany and large trade deficits in other eurozone countries. To restore balance, wages and prices in countries such as France, Italy, and Spain will have to fall relative to those in Germany. Productivity in the deficit countries will also have to increase relative to productivity in Germany. Evidence in the paper indicates that these adjustments will have to be large. Restoring equilibrium in the eurozone is thus likely to be a long and painful process. Figure. 1. Unit Labor Costs in Selected eurozone Countries Source: OECD Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles Published in Peer-reviewed Academic Journals Research Digest Links Discussion Papers Search Communications Newsletter RSS Feed Facebook X YouTube Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Projects Survey Fellows Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles in Journals Research Digest Discussion Papers Search Publications RIETI Books (English) RIETI Books (Japanese) History of Japan's Trade and Industry Policy Authors' Words Other Publications (English) Other Publications (Japanese) Events Symposiums Workshops BBL Seminars Archived Seminar Series Data JIP Database R-JIP Database CIP Database Industry-Specific Nominal and Real Effective Exchange Rates AMU and AMU Deviation Indicators JSTAR RIETI-TID RIETI FDI Database ICPA Project Links Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal (METI Journal) About RIETI Privacy Policy Site Policy Site Map Help Contact METI Web Site Research Institute of Economy, Trade and Industry, IAA (JCN 6010005005426)JCN: Japan Corporate Number Opinions expressed or implied on this website are solely those of the author, and do not necessarily represent the views of the Research Institute of Economy, Trade and Industry (RIETI).Titles, numbers, specific names, etc. on this website are as of the date of publication. In the case of reposting material from our website, contact us beforehand. Top