Exchange Rates and the Margins of Trade: Evidence from Chinese Exporters
Heiwai Tang and
Yifan Zhang ()
No 392011, Working Papers from Hong Kong Institute for Monetary Research
This paper studies how real exchange rate movements affect firm export behavior, using monthly data that cover the universe of Chinese export transactions over the period of 2000-2006. Specifically, we examine exchange rate effects on an exporter's extensive (entry, exit, and product churning) and intensive margins of exports. We find significant effects on the extensive margin. A 10% real appreciation of the renminbi is associated with a 1 percentage-point decline in the probability of entry, and a 0.2 percentage-point increase in the probability of exit. The effects among foreign-invested enterprises almost double for both entry and exit. Despite the seemingly large effect on the extensive margins, exchange rates alone can only explain about 4% of entries and about 1.6% of exits during the sample period. The exchange-rate elasticity of exports is estimated to be around 0.4 in the first year after the shock, with most of the adjustment taking place in the first six months. This finding of a relatively fast response to exchange rate shocks is consistent with anecdotal evidence about intense competition in the Chinese export sectors.
Keywords: Exchange Rates; Pass-Through; Margins of Trade; Export Participation; Product Churning (search for similar items in EconPapers)
JEL-codes: F14 F31 F32 (search for similar items in EconPapers)
Pages: 33 pages
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
http://www.hkimr.org/uploads/publication/41/ub_ful ... o-39_2011-final-.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Internal Server Error (http://www.hkimr.org/uploads/publication/41/ub_full_0_2_305_wp-no-39_2011-final-.pdf [301 Moved Permanently]--> http://www.aof.org.hk/research/HKIMR/uploads/publication/41/ub_full_0_2_305_wp-no-39_2011-final-.pdf [301 Moved Permanently]--> https://www.aof.org.hk/research/HKIMR/uploads/publication/41/ub_full_0_2_305_wp-no-39_2011-final-.pdf)
Journal Article: Exchange Rates and the Margins of Trade: Evidence from Chinese Exporters (2012)
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:hkm:wpaper:392011
Access Statistics for this paper
More papers in Working Papers from Hong Kong Institute for Monetary Research Contact information at EDIRC.
Bibliographic data for series maintained by HKIMR ().