Degree of openness and the choice of exchange rate regimes [Elektronische Ressource] : a re-evaluation with value-added based openness measures / von Lars Wang

Rasetzer

Sujets

• Handel

Informations

• Publié par: universitat_hohenheim
• Publié le: 01 janvier 2005
• Nombre de lectures: 32
• Langue: English

Extrait

Aus dem Institut für Volkswirtschaftslehre
Universität Hohenheim
Fachgebiet: Außenwirtschaft Prof. Dr. Ansgar Belke





Degree of Openness and the Choice of Exchange Rate Regimes –
A Re-Evaluation with Value-Added Based Openness Measures








Dissertation
zur Erlangung des Grades eines Doktors
der Wirtschaftswissenschaften


der Fakultät Wirtschafts- und Sozialwissenschaften




von
Lars Wang
aus Waiblingen
2005 Die vorliegende Arbeit wurde am 24.02.2005 von der
Fakultät Wirtschafts- und Sozialwissenschaften der Universität Hohenheim als
„Dissertation zur Erlangung des Grades eines Doktors der Wirtschaftswissenschaften“
angenommen.


Tag der mündlichen Prüfung: 14.03.2005
Dekan: Prof. Dr. Michael Ahlheim
Berichterstatter, 1. Prüfer: Prof. Dr. Ansgar Belke
Mitberichterstatter, 2. Prüfer: Prof. Dr. Harald Hagemann
3. Prüfer: Prof. Dr. Dr. h.c. Franz Heidhues Table of contents
List of figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
List of tables . . . . . . . 2
List of symbols . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Glossary . . . . . . . . . . . 12
1. Introduction . . . . 15
2. Significance of the degree of openness for the choice of exchange rate regimes . . . . 26
2.1 Synopsis of the term ‘degree of openness’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.1 Definition of openness to trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.2 Determinants of an economy’s openness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1.3 Alternative measures of openness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.1.4 Applications of trade openness in economic research . . . . . . . . . . . . . . . . 39
2.2 Traditional indicators of openness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.2.1 Characterization of trade shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.2.2 Measures of openness towards international trade . . . . . . . . . . . . . . . . . . . 46
2.2.3 Bilateral openness indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.3 The choice of exchange rate regimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.3.1 Alternative exchange rate regimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.3.2 Criteria for the choice of an exchange rate arrangement . . . . . . . . . . . . . . 52
2.3.3 The standard cost-benefit analysis of monetary integration . . . . . . . . . . . 52
3. Innovative measures of openness to international trade . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.1 Motivation: Enhancement of the traditional openness concept . . . . . . . . . . . . . . . 55
3.2 Economic analysis of the process of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.2.1 Characterization of input-output economics . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.2.2 The input-output table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
3.2.3 Input-output models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.3 The input-output framework for constructing the new openness indices . . . . . . 70
3.3.1 Representation of economic interconnections . . . . . . . . . . . . . . . . . . . . . . . 70
3.3.2 Calculation of income generated by trade . . . . . . . . . . . . . . . . . . . . . . . . . . . 76


3.4 Value-added based measures of openness towards international trade . . . . . . . . 82
3.4.1 Outline of adjusted shares of trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
3.4.2 The significance of domestic value added due to trade . . . . . . . . . . . . . . . 83
3.4.3 The significance of value added abroad due to trade . . . . . . . . . . . . . . . . . 84
3.4.4 The significance of income of production factors due to trade . . . . . . . . 86
3.4.5 The significance of the value of imported intermediates due to trade . . 87
4. The relationship between the degree of openness and the choice of exchange rate
regimes: An empirical re-assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.1 Motivation: Is actual openness a better forecaster for the commitment to
exchange rate regimes than traditional openness? . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.2 Survey on empirical studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.3 The data set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
4.3.1 Degrees of openness based on traditional and actual openness . . . . . . . . 90
4.3.2 Classifications of exchange rate arrangements . . . . . . . . . . . . . . . . . . . . . . . 97
4.4 Characterization of actual openness towards international trade . . . . . . . . . . . . . . 97
4.4.1 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.4.2 Results and interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
4.5 Influence of the actual openness concept on the explanation of the choice of
exchange rate regimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
4.5.1 Methodology 107
4.5.2 Test results and interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
5. New indices of bilateral trade openness 110
5.1 Value-added based adjustment of traditional shares of trade . . . . . . . . . . . . . . . . . 110
5.2 An extended input-output framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
5.2.1 The multi-regional input-output table with three regions . . . . . . . . . . . . . 112
5.2.2 Input-output analysis of bilateral trade relationships . . . . . . . . . . . . . . . . . 114
5.3 Actual openness of bilateral trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.3.1 Value-added based measures of openness towards an integration area 120
5.3.2 easures of openness towards the rest of the world 122
5.3.3 Derivation of the actual openness of international trade . . . . . . . . . . . . . . 123
5.4 Composition of traditional openness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
5.4.1 Traditional openness indices of bilateral trade . . . . . . . . . . . . . . . . . . . . . . . 124
5.4.2 Traditional concepts of openness to international trade . . . . . . . . . . . . . . . 127

6. Central and Eastern European countries’ (CEECs) adoption of the euro: A re-
evaluation with value-added based indices of openness . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
6.1 Motivation: Influence of actual openness on results of the cost-benefit analysis
of monetary integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
6.2 Comparison of the EU members’ degrees of openness based on traditional and
actual openness towards bilateral trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
6.2.1 The data set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
6.2.2 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
6.2.3 Outcomes and interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
6.3 Computable general equilibrium analysis with the Global Trade Analysis
Project (GTAP) model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
6.4 Scenario of the CEECs’ trade integration in the European Union for 2008 . . . 147
6.4.1 The simulation design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
6.4.2 Results of the simulation and interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 151
6.5 Should the CEECs adopt the euro in the year 2008? 153
6.5.1 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.5.2 Results of the analysis of monetary integration and interpretation . . . . 156
7. Conclusions and outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
References . . . . . . . . 209
List of figures
Figure 1: Stylized cost-benefit analysis of a monetary integration . . . . . . . . . . . . . . .