01853cas a2200265 a 4500 AALejournalIMF005089 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451869934 1018-5941 BD-DhAAL BD-DhAAL Oguro, Yoko. Trade Sensitivity to Exchange Rates in the Context of Intra-Industry Trade / Yoko Oguro, Kyoji Fukao, Yougesh Khatri. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (20 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper theoretically and empirically investigates export sensitivity to exchange rates in the context of intra-industry trade (IIT). It is assumed that more IIT implies a smaller elasticity of substitution among differentiated products and vice versa. The model presented suggests the gap in production costs between two countries has an influence on IIT as well. Industry-level pane regressions of thirty-eight trading pairs provide strong empirical support for the idea that the exchange rate sensitivity of exports declines in concert with the extent of ITT. An obvious policy implication is that the effectiveness of exchange rates in addressing trade imbalances will diminish as the extent of IIT increases. Mode of access: Internet Fukao, Kyoji. Khatri, Yougesh. IMF Working Papers; Working Paper ; No. 2008/134 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/134/001.2008.issue-134-en.xml IMF e-Library