Multi-Product Firms and Exchange Rate Fluctuations

Arpita Chatterjee, Rafael Dix-Carneiro and Jade Vichyanond ()
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Jade Vichyanond: International Monetary Fund

No 2012-29, Discussion Papers from School of Economics, The University of New South Wales

Abstract: This paper studies the effect of exchange rate shocks on export behavior of multi-product firms. We provide a theoretical framework illustrating how rms adjust their prices, quantities, product scope, and sales distribution across products in the event of exchange rate fluctuations. In response to a real exchange rate depreciation, firms increase markups for all products, but markup increases decline with firm-product-specic marginal costs of production. We find robust evidence for our theoretical predictions using Brazilian customs data containing destination-specic and product-specic export sales and quantities. The sample period covers the years 1997-2006, during which Brazil experienced a series of drastic currency fluctuations.

Keywords: Multi-product firms; exchange rate pass-through; product ladder; local distribution costs. (search for similar items in EconPapers)
JEL-codes: F12 F41 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2012-04
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (30)

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http://research.economics.unsw.edu.au/RePEc/papers/2012-29.pdf (application/pdf)

Related works:
Journal Article: Multi-product Firms and Exchange Rate Fluctuations (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:swe:wpaper:2012-29

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