How do Different Exporters React to Exchange Rate Changes?

Nicolas Berman (), Philippe Martin and Thierry Mayer
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Nicolas Berman: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IHEID - Graduate Institute of International and Development studies

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Abstract: This article analyzes the heterogeneous reaction of exporters to real exchange rate changes using a very rich French firm-level data set with destination-specific export values and volumes on the period 1995–2005. We find that high–performance firms react to a depreciation by increasing significantly more their markup and by increasing less their export volume. This heterogeneity in pricing-to-market is robust to different measures of performance, samples, and econometric specifications. It is consistent with models where the demand elasticity decreases with firm performance. Since aggregate exports are concentrated on high-productivity firms, precisely those that absorb more exchange rate movements in their markups, heterogeneous pricing-to-market may partly explain the weak impact of exchange rate movements on aggregate exports.

Keywords: Exporters; Exchange rate changes; High-productivity firms (search for similar items in EconPapers)
Date: 2012-02
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Citations: View citations in EconPapers (28)

Published in Quarterly Journal of Economics, 2012, 127 (1), pp.437 - 492. ⟨10.1093/qje/qjr057⟩

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Journal Article: How do Different Exporters React to Exchange Rate Changes? (2012)
Working Paper: How do Different Exporters React to Exchange Rate Changes? (2012)
Working Paper: How do Different Exporters React to Exchange Rate Changes? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03415420

DOI: 10.1093/qje/qjr057

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