 ARE SERVICE FIRMS AFFECTED BY EXCHANGE RATE MOVEMENTS?Jen Baggs, Eugene Beaulieu () and Loretta Fung Review of Income and Wealth, 2010, vol. 56, issue s1, S156-S176 Abstract: There is a growing literature addressing the effects of exchange rate movements on manufacturing firms, but almost no analysis concerning firms in the service sector. We analyze the effects of industry specific real exchange rate movements on the profitability, survival, and sales of Canadian service sector firms. Using rich firm‐level data and service trade data, our empirical results show that real appreciations of the Canadian dollar reduce firm probability of survival, sales, and profitability while depreciations have the opposite effect. Overall, our findings suggest a significant exchange rate effect on service firms that is qualitatively similar to that found for manufacturing firms. However, the magnitude of the exchange rate effects is quite different for manufacturing and service firms. The impact of the exchange rate on profits is larger for manufacturing firms; the impact on survival is larger among service sector firms; and the impact on sales is of similar magnitude. Date: 2010 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:revinw:v:56:y:2010:i:s1:p:s156-s176 Ordering information: This journal article can be ordered from Access Statistics for this article Review of Income and Wealth is currently edited by Conchita D'Ambrosio and Robert J. Hill More articles in Review of Income and Wealth from International Association for Research in Income and Wealth Contact information at EDIRC. |
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