Multi-Product Firms and Exchange Rate Fluctuations

Abstract

Esteban Rossi-Hansberg, and trade workshop participants at Princeton University for many helpful comments and suggestions. Many thanks to João De Negri and IPEA-Brasília for granting access to Secex and RAIS. Comments and questions are welcome. Please contact

How do exchange rate movements affect Chinese exports? — A firm-level investigation

“…For a multi-product exporter, we might expect the prices of the most productive product to be more sensitive to real exchange rate movements than other products of the same firm. In fact, Chatterjee et al (2013) show that producer price increases more pronouncedly for products closer to the core competency. Since we do not observe productivity at the product level of a firm, we create two export rank variables in terms of sales, which serve as additional performance measures.…”

“…four-digit HS sector in columns (5) and (6), and then follow BMM and Chatterjee et al (2013) to include only single-product firms in columns (7) and (8), where we define single-product firms as those having only one product exported for a firm-destination-year triplet. 9 The patterns remain qualitatively unchanged.…”

“…The first is the Heckman (1979) two-stage procedure, similar to that used by Chatterjee et al (2013). We first estimate a probit selection equation for whether a firm-product-country triplet (fpc) appears in year t (y fpc,t = 1 or 0).…”

“…Most studies use aggregate data, which cannot separate the response of export price from that of volume. Moreover, although there is substantial heterogeneity across firms (Melitz, 2003), few studies have linked the exchange rate elasticity or ERPT to firm-level characteristics, with a few recent exceptions including Berman et al (2012, henceforth BMM), Chatterjee et al (2013), and Amiti et al (2014). Burstein and Gopinath (2014) provide the most up-to-date survey on the relationship between international prices and exchange rates.…”

Exchange Rate Movements and the Distribution of Productivity

“…Other related papers that have focused on the impact of exchange rate movements include: Forbes (,b), who examines the impact of large currency depreciations on firm performance; Kandilov and Leblebicioğlu (), who investigate the effects of exchange rate volatility on firm investment; Araújo and Paz (), who study the impact of currency devaluations on wages for different types of firms and employees; and Tang and Zhang () and Chatterjee et al. (), who estimate the effects of exchange rate movements on product scope, churning and concentration of multi‐product exporters.…”