PEPP Seminar (April 13th, 2023): “Nominal Exchange Rate Variability, Industry-level Nominal Wage Rigidity, and the Pattern of Trade” by Prof. Ishise Hirokazu, Associate Professor, Osaka School of International Public Policy, Osaka University
2023/03/31
By Prof. Ishise Hirokazu (Associate Professor, Osaka School of International Public Policy, Osaka University)
Date：Thursday, April 13th, 2023
Time：16:45～18:15 (JST)
Venue: 3B405
Abstract:
Does the stabilization of the nominal exchange rate stimulate international trade? This paper theoretically and empirically revisits this old but unresolved question by considering the differential impacts across sectors, particularly focusing on the interactive role with industry-level nominal wage rigidity. A stylized model clarifies mechanisms; after a change in the nominal exchange rate, trade may increase or decrease. I then show that in the long-run nominal exchange rate variability reduces trade if a sector faces the wage rigidity. A testable implication is that a country whose nominal exchange rate varies less has a comparative advantage in industries that intensively use sticky-wage workers. World trade data supports this comparative-advantage-type prediction.
