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

Hongbin Li, Hong Ma and Yuan Xu

Journal of International Economics, 2015, vol. 97, issue 1, 148-161

Abstract: This paper provides first-hand firm-level evidence on Chinese exporters' reaction to RMB exchange rate movements. We find that the RMB price response to exchange rate changes is very small, indicating relatively high exchange rate pass-through into foreign currency denominated prices, while the volume response is moderate and significant. Furthermore, exporters with higher productivity price more to market, though the pass-through is still very high. Other sources of heterogeneity, such as import intensity, distribution costs, income level of the destination countries, and foreign ownership also matter. Moreover, RMB appreciation reduces the probability of entry as well as the probability of continuing in the export market.

Keywords: Exchange rate elasticity; Exchange rate pass-through; Extensive margin (search for similar items in EconPapers)
JEL-codes: F14 F31 F32 F41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (132)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:97:y:2015:i:1:p:148-161

DOI: 10.1016/j.jinteco.2015.04.006

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