The yuan-dollar parity and its effects on Mexico's exports of manufacturing goods

Abstract

This paper evaluates the impact of Chinese exchange rate policy on Mexican manufacturing exports in the US market. To that end, an amplified export function which combines demandand supply-side variables is estimated. The empirical evidence shows that, in the long run, a real depreciation of the yuan visà- vis the US dollar reduces Mexican manufacturing sales in the US. The econometric work also suggests that lowering unit labor costs, perhaps by means of a comprehensive and coherent training policy package, could serve the purpose of offsetting the negative effects of an undervalued Chinese currency.

Keywords

• exportaciones manufactureras
• política cambiaria
• costos laborales unitarios
• México
• China