Product adjustments: A firm-level analysis of the impact of a real exchange rate shock

Karen Helene Ulltveit-Moe and Andreas Moxnes

No 7923, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a new and extensive micro data set we investigate the impact of a change in international competitive pressure following a real exchange shock on multi-product firms? product mix. We only find weak evidence for the core competencies hypothesis, according to which, we would expect the exposed firms to reduce their product portfolio in response to the shock. But firms exposed to the shock significantly reduced their rate of product churning, relative to the control group of nonexposed firms. Moreover, we find a strong positive link between churning in the range of imported and exported products, suggesting that the product mix of imported inputs may be an important, but less understood, margin of adjustment.

Keywords: Heterogeneous firms; Product differentiation; Firm restructuring; Real exchange rate shock (search for similar items in EconPapers)
JEL-codes: F12 F14 F31 L16 (search for similar items in EconPapers)
Date: 2010-07
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Citations: View citations in EconPapers (2)

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