Exchange Rates, International Outsourcing, and Firm Export Dynamics

Tomohiko Inui and Young Gak Kim

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: Using the most comprehensive Japanese firm-level dataset, we investigate the effect of exchange rate fluctuations on Japanese firms' performance in the international market. We examine firm characteristics based on firm export dynamics. The estimation results overall indicate the depreciation of the yen may play an important role in the expansion of export, but a limited role in terms of entry to the export market. The results also show that export elasticity is significantly affected by import intensity, and decreases from 0.81 in 1997 to 0.64 in 2015 because of the increased import intensity, indicating that fully globalized firms utilize imports to alleviate negative shocks from exchange rates on exports and to improve price competitiveness.

Pages: 27 pages
Date: 2020-10
New Economics Papers: this item is included in nep-bec, nep-cse and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:20083

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