Who Captures Export Windfalls? Exchange Rates, Export Profitability, and National Saving under Dominant-Currency Pricing
IMF Working Papers, January 16, 2026
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- Who Captures Export Windfalls? Exchange Rates, Export Profitability, and National Saving under Dominant-Currency Pricing
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Bibliographic details
- Authors: Bas B. Bakker
- Published: January 16, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229037204.001
Mechanism under dominant-currency pricing
- Under dominant-currency pricing—where many export prices are set in dollars—the real exchange rate allocates export windfalls between producers and consumers.
- When the real exchange rate is stable:
- Rising dollar export revenues pass through nearly one-for-one into higher real local-currency export income, profits, and retained earnings.
- When the real exchange rate appreciates:
- Part of the windfall accrues to consumers through cheaper imports, compressing exporters' margins.
- Implication: National saving should respond to real local-currency export income—the portion accruing to domestic producers—rather than to dollar receipts per se.
Data and empirical strategy
- Panel structure: five-year panels for 42 economies over 1982–2022.
- Estimation focuses on the relationship between national saving and measures of export income denominated in dollars versus real local-currency export income.
Key empirical findings and statistics
- The national saving rate rises by about 0.27 percentage points for each 1 percentage point of GDP increase in real local-currency export income.
- Dollar export income has no independent effect on national saving once the real local-currency measure is included.
- Case validations:
- Peru versus Brazil during the commodity boom support the mechanism and its timing.
- China’s post-WTO export surge validates the mechanism and timing.
- Argentina's 2002 devaluation validates the mechanism and timing.
- Out-of-sample prediction:
- A coefficient estimated from 41 countries predicts China's 9.7-percentage-point saving increase (2002–2007) with an error of just 0.1 point.
Interpretation and broader implications
- These findings reinterpret the "global saving glut" as the aggregate outcome of export booms whose windfalls accrued disproportionately to high-saving producers when real exchange rates remained stable.
- Emphasizes the role of exchange-rate behavior in determining how export windfalls are distributed between domestic producers and consumers, and in turn how they affect national saving.
Bas B. Bakker, "Who Captures Export Windfalls? Exchange Rates, Export Profitability, and National Saving under Dominant-Currency Pricing", IMF Working Paper No. 2026/009.
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