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EXCHANGE RATE BANDS OF INACTION AND PLAY‐HYSTERESIS IN GERMAN EXPORTS—SECTORAL EVIDENCE FOR SOME OECD DESTINATIONS
Author(s) -
Belke Ansgar,
Göcke Matthias,
Günther Martin
Publication year - 2013
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12000
Subject(s) - economics , hysteresis , exchange rate , german , destinations , path (computing) , monetary economics , econometrics , international economics , physics , computer science , geography , condensed matter physics , archaeology , tourism , programming language
A non‐linear model is applied, where suddenly strong spurts of exports occur when changes of the exchange rate go beyond a zone of inaction, which we call ‘play’ area—analogous to mechanical play. We implement an algorithm describing path‐dependent play‐hysteresis into a regression framework. The hysteretic impact of real exchange rates on G erman exports is estimated based on the period from 1995 Q 1 to 2010 Q 3. Looking at some of the main export partners of G ermany outside the euro area and some of the most important tradeable sectors we find significant hysteretic effects for a part of the G erman exports.