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The Colombian peso depreciation of 2014-2015 and the adjustment of trade in the manufacturing sector

Juan Esteban Carranza, Camila Casas and Alejandra Gonzalez-Ramirez ()

Borradores de Economia from Banco de la Republica de Colombia

Abstract: This paper documents the adjustment of international trade for the Colombian manufacturing sector following the 2014-2105 depreciation of the peso. We combine detailed information on trade with firm-level balance sheet and credit data, and we analyze the response of exports and imports at the macro-, firm-, and product-level to the exchange rate shock. The evidence indicates that export and import prices are sticky in dollars, and therefore the depreciation triggered a relatively rapid contractionary response from imports, whereas the response from exports was slower and weaker. Our micro-level analyses of the combined data suggest that the muted response of exports is associated with exporting firms’ reliance on imported imports, and with their preexisting higher debt, as predicted by the literature on balance sheet effects. **** RESUMEN: En este documento describimos el ajuste del comercio internacional del sector manufacturero colombiano a la depreciación del peso de 2014-2015. Combinamos información detallada de comercio exterior con datos de balances y créditos comerciales a nivel de firma, y analizamos la respuesta de las exportaciones y las importaciones al choque cambiario a niveles macro, de firma y de producto. Encontramos que los precios de las exportaciones y las importaciones son rígidos en dólares, y por lo tanto la depreciación generó una contracción rápida de las importaciones mientras que la respuesta de las exportaciones fue menor y más lenta. El análisis de los microdatos sugiere que la respuesta débil de las exportaciones está asociada con el uso de insumos importados por parte de las firmas exportadoras, y con la existencia previa de mayores niveles de endeudamiento.

Keywords: Exchange Rate; Exports; Imports; Manufacturing Sector Tasa de cambio; Exportaciones; Importaciones; Sector manufacturero (search for similar items in EconPapers)
JEL-codes: F1 F4 L1 L6 (search for similar items in EconPapers)
Pages: 20
Date: 2020-08
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:1125

DOI: 10.32468/be.1125

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