The Micro and Macro of a Large and Sudden Devaluation

Andrea Ariu and Giulia Rivolta

No def146, DISCE - Working Papers del Dipartimento di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: This paper quantifies the micro- and macro-level consequences of the sudden appreciation of the Swiss franc in 2015, one of the sharpest and most persistent currency movements in recent decades. Using detailed firm-level data on French imports and exports, we show that the Swiss franc appreciation led to a rise in exports, driven mainly by the entry of new firms and new products, while imports increased only briefly due to a spike in prices among continuing firm–product pairs. These dynamics mirror a textbook J-curve adjustment and reveal the firm-level mechanisms underlying this aggregate response. On the macro side, we trace how the shock propagated through supply chains, capturing both direct and indirect exposures through input–output linkages. This network-based perspective uncovers a small but negative overall impact on French GDP, driven by the stronger hit to importers, more reliant on non-euro currencies and more central within domestic production networks, who acted as key conduits transmitting the negative side of the shock across the economy.

Keywords: Exchange rate shocks; international trade; production network. (search for similar items in EconPapers)
JEL-codes: F14 F31 F44 (search for similar items in EconPapers)
Pages: 32
Date: 2025-10
New Economics Papers: this item is included in nep-bec, nep-iaf, nep-int, nep-net and nep-opm
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