Recent Blog Posts
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The $4.5 Billion Dollar Bank Run
Nov 07 201111:20 am EDT -
The Times' Rorshach Geithner Story
Apr 27 20099:26 am EDT -
Sinking Animal Spirits
Apr 27 20098:45 am EDT -
Counter-cyclical Urban Policy
Apr 26 200910:00 am EDT -
Be Your Own Counterfeiter
Apr 26 20099:36 am EDT -
Being Tim Geithner
Apr 25 200912:37 pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:41 am EDT -
What Good is the News?
Apr 25 20098:32 am EDT -
Stressful Enough
Apr 24 20092:29 pm EDT -
Not Regretting the Pound
Apr 24 20091:09 pm EDT
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Chinese iPod Datapoint of the Day
From Robert Koopman, Zhi Wang, and Shang-Jin Wei:
In trade statistics, the Chinese export value for a unit of a 30GB video model in 2006 was about $150. However, Linden, Kraemer, and Dedrick (2007) estimated the value added attributable to producers in China at only $4.
I can't find the paper they cite. But their bigger conclusion is worth repeating:
Our best estimate suggests that the share of domestic content in China's exports is about 50%, which is much lower than most other countries. This implies that a given exchange rate appreciation is likely to have a smaller effect on China's trade surplus than for other countries.
In other words, the next time you hear a politician's call for China to let its currency appreciate more quickly is a bit like the same politician calling for offshore drilling to reduce oil prices. The mechanism works in theory, but in practice the effects are likely to be a lot smaller than the politician would have you believe.
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