Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective
This paper investigates whether firms’ participation in the global value chain (GVC) weakens the exchange rate risk and its mechanism. Based on Powers and Riker’s (2013) expanding exchange rate risk model, this paper matches data from China’s refined input-output table, the customs database, and the...
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| Format: | Article |
| Language: | English |
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Wiley
2020-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2020/5096720 |
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| _version_ | 1832560358475169792 |
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| author | Mimi Ning Jianhong Qi |
| author_facet | Mimi Ning Jianhong Qi |
| author_sort | Mimi Ning |
| collection | DOAJ |
| description | This paper investigates whether firms’ participation in the global value chain (GVC) weakens the exchange rate risk and its mechanism. Based on Powers and Riker’s (2013) expanding exchange rate risk model, this paper matches data from China’s refined input-output table, the customs database, and the industrial enterprise database from 2002 to 2009 to measure the firms’ GVC forward linkages and backward linkages and therefore empirically tests the relationship between participation in the GVC and the exchange rate risk. The results show that participation in the GVC reduces firms’ exchange rate risk through a “comovement effect” for forward linkages and a “hedging effect” for backward linkages; differences in a firm’s position in the GVC affect the extent of reduction in the exchange rate risk. Encouraging firms to participate in the GVC and strengthening GVC relationship with high-income countries in particular play an important role in minimizing the exchange rate risk. |
| format | Article |
| id | doaj-art-f7218ebd86714d679649378d172a15c3 |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2020-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-f7218ebd86714d679649378d172a15c32025-02-03T01:27:56ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2020-01-01202010.1155/2020/50967205096720Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain PerspectiveMimi Ning0Jianhong Qi1Economics Department, Shandong University, Jinan, Shandong 250100, ChinaEconomics Department, Shandong University, Jinan, Shandong 250100, ChinaThis paper investigates whether firms’ participation in the global value chain (GVC) weakens the exchange rate risk and its mechanism. Based on Powers and Riker’s (2013) expanding exchange rate risk model, this paper matches data from China’s refined input-output table, the customs database, and the industrial enterprise database from 2002 to 2009 to measure the firms’ GVC forward linkages and backward linkages and therefore empirically tests the relationship between participation in the GVC and the exchange rate risk. The results show that participation in the GVC reduces firms’ exchange rate risk through a “comovement effect” for forward linkages and a “hedging effect” for backward linkages; differences in a firm’s position in the GVC affect the extent of reduction in the exchange rate risk. Encouraging firms to participate in the GVC and strengthening GVC relationship with high-income countries in particular play an important role in minimizing the exchange rate risk.http://dx.doi.org/10.1155/2020/5096720 |
| spellingShingle | Mimi Ning Jianhong Qi Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective Discrete Dynamics in Nature and Society |
| title | Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective |
| title_full | Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective |
| title_fullStr | Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective |
| title_full_unstemmed | Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective |
| title_short | Exchange Rate Risk Analysis Based on Firm Data: A Global Value Chain Perspective |
| title_sort | exchange rate risk analysis based on firm data a global value chain perspective |
| url | http://dx.doi.org/10.1155/2020/5096720 |
| work_keys_str_mv | AT mimining exchangerateriskanalysisbasedonfirmdataaglobalvaluechainperspective AT jianhongqi exchangerateriskanalysisbasedonfirmdataaglobalvaluechainperspective |