Published in:
Asian Economic Policy Review, 8 (2013) 2, Seite 298-321
Language:
English
DOI:
10.1111/aepr.12032
ISSN:
1832-8105;
1748-3131
Origination:
Footnote:
Description:
<jats:p>This paper constructs a new dataset of the industry‐specific real effective exchange rate, based on the producer price indices, for <jats:styled-content style="fixed-case">J</jats:styled-content>apan, <jats:styled-content style="fixed-case">C</jats:styled-content>hina, and <jats:styled-content style="fixed-case">K</jats:styled-content>orea on a monthly basis from <jats:styled-content style="fixed-case">J</jats:styled-content>anuary 2001 to <jats:styled-content style="fixed-case">F</jats:styled-content>ebruary 2013 in order to provide a better indicator for export price competitiveness. By conducting simulation analysis, we found that <jats:styled-content style="fixed-case">K</jats:styled-content>orean electrical machinery firms substantially improved their cost competitiveness by lowering their production costs during the Korean won appreciation period, while Japanese firms' large plant investment caused by management misjudgments led to excessive production capacity, which resulted in the deterioration of Japanese export competitiveness. A structural vector autoregression analysis also reveals that industry differences of cost competitiveness as well as nominal exchange rate changes have significant impact on export performances of <jats:styled-content style="fixed-case">J</jats:styled-content>apan and <jats:styled-content style="fixed-case">K</jats:styled-content>orea.</jats:p>