@article{796071bff1f44bfeb34bec1769a4a5f7,
title = "The impact of exchange rate changes on the Japanese chemical industry",
abstract = "We investigate how exchange rates affect the Japanese chemical industry. This industry exports sophisticated products to downstream firms. Since more complex products are less substitutable in international trade, we investigate whether they have lower price elasticities. We measure complexity using Hidalgo and Hausmann's (2009) product complexity index. We find that price elasticities are lower for more complex chemical goods. We also find that stock returns of chemical firms that occupy vital niches in the world economy are harmed less by yen appreciations. These results indicate that exporting sophisticated products can reduce export volatility and profit volatility arising from exchange rate swings.",
keywords = "Chemical industry, Exchange rate elasticities, Exchange rate exposure, Japan, Product complexity index",
author = "Willem Thorbecke and Nimesh Salike and Chen Chen",
note = "Funding Information: We thank two anonymous referees for excellent comments. We also thank Seiichiro Inoue, Masayuki Morikawa, Makoto Yano, and other colleagues for valuable suggestions. Nimesh Salike and Chen Chen acknowledge the support of Xi'an Jiaotong-Liverpool University Research Development Fund (RDF-16-02-38). Any errors are our own responsibility. Funding Information: We thank two anonymous referees for excellent comments. We also thank Seiichiro Inoue, Masayuki Morikawa, Makoto Yano, and other colleagues for valuable suggestions. Nimesh Salike and Chen Chen acknowledge the support of Xi{\textquoteright}an Jiaotong-Liverpool University Research Development Fund ( RDF-16-02-38 ). Any errors are our own responsibility. Publisher Copyright: {\textcopyright} 2022 Elsevier B.V.",
year = "2022",
month = jun,
doi = "10.1016/j.japwor.2022.101135",
language = "English",
volume = "62",
journal = "Japan and the World Economy",
issn = "0922-1425",
}