Export modes and firms’ adjustments to exchange rate movements
Stefano Bolatto,
Marco Grazzi and
Chiara Tomasi
European Economic Review, 2022, vol. 141, issue C
Abstract:
The paper provides novel evidence on the heterogeneous response of exporting firms to exchange rate movements. Italian firm-level trade data by product and destination indeed unveil that adjustments to exchange rate variation substantially differ across export modes. The estimates show that, in the event of a domestic currency appreciation, export intermediaries react by decreasing more their price – and less their export volume – than direct manufacturing exporters; and that the different response of direct exporters and wholesale firms is not driven by firm heterogeneity in size or productivity. By examining the aggregate implications of such micro-level findings, the paper documents that, following an appreciation, aggregate bilateral exports routed through wholesale firms tend to decline by less than total direct exports. Overall, our results suggest that, in addition to facilitating trade, export intermediation may substantially contribute to stabilizing trade patterns across countries.
Keywords: Export intermediation; Exchange rate pass-through; Pricing-to-market; Export mode selection; Productivity sorting; Heterogeneous markups; Double marginalization (search for similar items in EconPapers)
JEL-codes: D22 F12 F14 L22 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:141:y:2022:i:c:s0014292121002452
DOI: 10.1016/j.euroecorev.2021.103955
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