Exchange Rate Transmission and Export Activity at the Firm Level

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in February 2013Abstract This paper analyses how exchange rate shocks are transmitted at the firm level and establishes a nexus to firm-level export activity. Using precise survey data from a sample of Swiss firms, I find that an appreciation increases the probability of a decrease in firm-level costs, prices and profits. Exchange rate movements are passed through to import prices, absorbed in firm selling prices and lead to adjustments in firm profits. The pattern is non-linear across firms with a varying degree of international exposure. The likelihood of adjustments is increasing in firm-level export share in total turnover. I also show that exchange rate variability affects adjustment probabilities. The analysis suggests that Swiss firms take prices as given. Exchange rate shocks are absorbed through a reduction in both costs and prices, however, these adjustments are not proportional such that overall profits decline during appreciation periods.

Exchange rate fluctuations and quality composition of exports: Evidence from Swiss product‐level data

“…Related to its beneficial effect on aggregate export sales, a higher average export quality is also likely to increase the resilience of the Swiss export sector to currency appreciations due to a lower price sensitivity of higher‐quality goods, as shown in Table . However, firm profits are still likely to fall when the Swiss franc appreciates, as suggested by Lassmann ().…”

How are Firms Affected by Exchange Rate Shocks? Evidence from Survey Based Impulse Responses

“…The pass-through is largely different for goods priced in dollars versus goods priced in an other currency. Both articles also conclude that the pass-through is rather low for the U.S. Lassmann (2013) provides empirical results for the correlation between exchange rate movements and imports prices and profits using time series survey data for Switzerland. She reports an increase in the probability of deteriorating profits, costs, and prices after an appreciation of the Swiss franc.…”