Import Response to Exchange Rate Fluctuations: A Micro-level Investigation

Yao Li, Jenny Xu () and Carol Zhao Chen
Additional contact information
Jenny Xu: Department of Economics, Hong Kong University of Science and Technology
Carol Zhao Chen: Department of Economics, Hong Kong University of Science and Technology

No 2015-27, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

Abstract: This paper presents theory and evidence on firms' import responses to exchange rate fluctuations using disaggregated Chinese imports data. The paper develops a heterogeneous-firm trade model that predicts import responses at both extensive and intensive margins as well as the more profound adjustment under ordinary trade than processing trade. Next, the paper empirically investigates import responses to exchange rate fluctuations at extensive and intensive margins in both the short run and the long run, and confirms the model predictions. We also find variations among import responses under different exchange rate regimes, including fixed exchange rate, expected appreciation, and confirmed appreciation.

Keywords: exchange rate; import; extensive margin; intensive margin; processing trade; exchange rate regimes; pass-through (search for similar items in EconPapers)
JEL-codes: F14 F31 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2015-05, Revised 2015-05
New Economics Papers: this item is included in nep-int, nep-opm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://iems.ust.hk/assets/publications/working-papers-2015/iemswp2015-27.pdf First version, 2015 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hku:wpaper:201527

Access Statistics for this paper

More papers in HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies Contact information at EDIRC.
Bibliographic data for series maintained by Carla Chan ( this e-mail address is bad, please contact ).