{
  "title": "Demand for Value Added and Value-Added Exchange Rates",
  "publication": "IMF Working Papers, September 8, 2015",
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  "summary": "We examine the role of cross-border input linkages in governing how international relative price changes influence demand for domestic value added.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Authors: Rudolfs Bems, Robert C. Johnson\n- Date: September 8, 2015\n- Core question: Role of cross-border input linkages in governing how international relative price changes influence demand for domestic value added.\n- Novel contribution: Definition of a value-added real effective exchange rate (REER) that aggregates bilateral value-added price changes and links this REER to demand for value added.\n- Key conceptual points:\n  - Input linkages enable countries to gain competitiveness following depreciations by supply chain partners, counterbalancing beggar-thy-neighbor effects.\n  - Cross-country differences in input linkages imply that the elasticity of demand for value added is country specific.\n- Empirical approach: Use of global input-output data to demonstrate the quantitative importance of these conceptual insights and to compute historical value-added REERs."
    },
    {
      "heading": "Major findings and quantitative highlights",
      "content": "- Input linkages can alter competitiveness effects from exchange rate movements, enabling competitive gains when supply chain partners depreciate.\n- Elasticity of demand for value added varies by country because of differences in cross-border input linkages.\n- The paper computes historical value-added REERs using global input-output data, demonstrating the quantitative relevance of the value-added REER concept."
    },
    {
      "heading": "Methodology and data",
      "content": "- Framework: Development of a value-added REER that aggregates bilateral value-added price changes and links that REER to demand for value added.\n- Data: Global input-output data used to quantify conceptual insights and to compute historical value-added REERs."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Competition, Demand elasticity, Economic theory, Exchange rates, Exports, Financial markets, Foreign exchange, International trade, Real effective exchange rates\n- Keywords: Armington-REER change, Armington-REER framework, Armington-REER index, Asia and Pacific, changes in the Armington-REER, Competition, Demand elasticity, demand system, Exchange rates, Exports, Global, global supply chains, production elasticity, Real effective exchange rate, Real effective exchange rates, real value, REER weight, value-added REER, weight difference, WP\n\n---\n\n Content in this bundle\n\n- Wp15199\n  - Wp15199 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp15199 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/demand-for-value-added-and-value-added-exchange-rates-43264"
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    "Authors: Rudolfs Bems, Robert C. Johnson",
    "Published: September 8, 2015",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513595047.001",
    "Authors: Rudolfs Bems, Robert C. Johnson",
    "Date: September 8, 2015",
    "Core question: Role of cross-border input linkages in governing how international relative price changes influence demand for domestic value added.",
    "Novel contribution: Definition of a value-added real effective exchange rate (REER) that aggregates bilateral value-added price changes and links this REER to demand for value added.",
    "Key conceptual points:",
    "Empirical approach: Use of global input-output data to demonstrate the quantitative importance of these conceptual insights and to compute historical value-added REERs.",
    "Input linkages can alter competitiveness effects from exchange rate movements, enabling competitive gains when supply chain partners depreciate.",
    "Elasticity of demand for value added varies by country because of differences in cross-border input linkages.",
    "The paper computes historical value-added REERs using global input-output data, demonstrating the quantitative relevance of the value-added REER concept.",
    "Framework: Development of a value-added REER that aggregates bilateral value-added price changes and links that REER to demand for value added.",
    "Data: Global input-output data used to quantify conceptual insights and to compute historical value-added REERs.",
    "Subject: Competition, Demand elasticity, Economic theory, Exchange rates, Exports, Financial markets, Foreign exchange, International trade, Real effective exchange rates",
    "Keywords: Armington-REER change, Armington-REER framework, Armington-REER index, Asia and Pacific, changes in the Armington-REER, Competition, Demand elasticity, demand system, Exchange rates, Exports, Global, global supply chains, production elasticity, Real effective exchange rate, Real effective exchange rates, real value, REER weight, value-added REER, weight difference, WP",
    "**Wp15199**"
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