The Effect of Exchange Rate Volatility on Productivity of Korean Manufacturing Plants: Market Average Rate Regime vs Free Floating

Bo Young Choi () and Ju Hyun Pyun ()
Additional contact information
Bo Young Choi: Korea Institute for International Economic Policy
Ju Hyun Pyun: Korea University Business School (KUBS)

No 16-8, Working Papers from Korea Institute for International Economic Policy

Abstract: This study examines how exchange rate volatility can influence total factor productivity (TFP) in various dimensions. Using Korean manufacturing plant-level data for 1990-2007, we first compare and contrast the effects of exchange rate volatility on TFPs between two different exchange rate regimes ― pegged and free floating. We find that the exchange rate volatility had a negative effect on productivity in both regimes but this negative effect was greater during the period when exchange rate fluctuation was restricted, compared to the period with free floating rate. We also find that the negative effects of the volatility on productivity were heterogeneous over TFP quantiles and exhibited an inverted W-shape curve. In particular, the negative effects were more pronounced for exporting plants that had the lowest or highest TFPs.

Keywords: Total Factor Productivity; Koraen Plant-level Data; Exchange Rate Voltality; Quantile Regression (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2016-10-10
New Economics Papers: this item is included in nep-eff
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ssrn.com/abstract=2862292 Full text (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:ris:kiepwp:2016_008

Access Statistics for this paper

More papers in Working Papers from Korea Institute for International Economic Policy [30147] 3rd Floor Building C Sejong National Research Complex 370 Sicheong-daero Sejong-si, Korea. Contact information at EDIRC.
Bibliographic data for series maintained by Juwon Seo ( this e-mail address is bad, please contact ).