The effect of exchange rate shocks on firm-level exports: evidence from the Brexit vote
Ana Fernandes and
L. Alan Winters
No 13253, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper exploits the abrupt and sharp depreciation of the British Pound after the Brexit referendum as a quasi-natural experiment to investigate the effect of exchange rate shocks on export quantity, price, entry and exit. We use transaction-level export data for the universe of exporters in Portugal. Using monthly observations on export quantity and price for the same firm exporting the same product to buyers in the UK and in other countries, allows us to cleanly identify the differential response to the shock for the UK market, relative to other markets. We find that exporters reduced their mark-up in the UK market after the referendum shock. Our estimates imply a large pricing-to-market coefficient and exchange rate pass-through. Exporters that are more productive adjust their mark-ups by more after the exchange rate shock, and have lower pass-through. There is more pricing-to-market for consumer goods than for intermediate inputs. Within the same firm-product, export quantity to the UK also decreased after the shock. The referendum shock reduced the rate of export entry to the UK market by Portuguese firms and the probability of their continuing to export in the UK.
Keywords: Brexit vote; exchange rate pass-through; exchange rate shocks; exports; extensive margin of trade; intensive margin of trade; pricing-to-market (search for similar items in EconPapers)
JEL-codes: F14 F31 F32 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at firstname.lastname@example.org
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13253
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=13253
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().