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Applied Economics Letters Volume 28, 2021 - Issue 15
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Research Article

Testing the relationship between real effective exchange rate and absolute cost advantage. A dynamic panel GMM analysis from NAFTA

Fahd Boundi ChrakiSchool of Economics, Universidad Nacional Autonóma de México, Mexico City, MexicoCorrespondence[email protected]
ORCID Iconhttps://orcid.org/0000-0002-4137-6202
ORCID Icon
Pages 1332-1335 | Published online: 28 Aug 2020
 
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ABSTRACT

This research aims to test the nexus between real effective exchange rates and absolute cost advantage for the North American Free Trade Agreement (NAFTA) between 1995 and 2014. By using the dynamic panel generalized method of moments (GMM), the findings show that the manufacturing sectors’ competitiveness is positively associated with the decrease in unit production costs and negatively related to the increase in the intrasectoral profitability gap.

JEL CLASSIFICATION:

Acknowledgments

The author thanks two anonymous referees for their comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the author.

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