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Journal of Economic Integration 2013 June;28(2) :241-268.
DOI: https://doi.org/10.11130/jei.2013.28.2.241
Exchange Rate Devaluation and Reshuffling of Global Jobs
Luca Macedoni and 
Fabio Sdogati 
University of California, Davis, U. S. A.
Politecnico di Milano, Milano, Italy
Corresponding Author: Luca Macedoni ,Tel: +01 5306016147, Email: lmacedoni@ucdavis.edu.
Copyright ©2013 Journal of Economic Integration
ABSTRACT
Current debates presume that devaluation of one country’s currency may transfer the production of imported intermediate goods to the devaluating country. This paper argues that in a global production network involving more than two countries in the production of fragments, this presumption may not hold. With a simple Ricardian model of fragmentation, this paper shows that the production of fragments can be transferred only if countries have close comparative advantage. Using data from the World Input Output Database, our model is found to be empirically supported.

JEL Classification
F10: General
Keywords: International Fragmentation of Production | Exchange Rate
 
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