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Export Sophistication and Exchange Rate Elasticities: The Case of Switzerland

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  • THORBECKE, Willem
  • KATO Atsuyuki

Abstract

In 2011, Switzerland announced a floor for the Swiss franc, and it immediately depreciated by 10 percent. Many argue that depreciations should not matter for Switzerland's export basket because luxury brands and high value added products predominate, and these should compete on quality rather than price. We measure the sophistication of Swiss exports using Hausmann et al.'s (2007) and Kwan's (2002) measures and find them to be the most sophisticated in the world. We also estimate export equations and find price elasticities exceeding unity. These findings run counter to the claim that countries exporting high end goods should have low exchange rate elasticities.

Suggested Citation

  • THORBECKE, Willem & KATO Atsuyuki, 2014. "Export Sophistication and Exchange Rate Elasticities: The Case of Switzerland," Discussion papers 14031, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:14031
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    References listed on IDEAS

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