Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/182211
Authors: 
Berthou, Antoine
Dhyne, Emmanuel
Year of Publication: 
2018
Series/Report no.: 
NBB Working Paper 334
Abstract: 
This paper provides an estimation of the reaction of firm-level exports consecutive to real exchange rate movements - the exchange rate elasticity of exports. Following recent theoretical works emphasizing the role played by firm heterogeneity, we test in particular how the exchange rate elasticity may be a..ected by firm-level productivity, and how the heterogeneous reaction of different firms may contribute to shape the aggregate reaction of countries' exports. The analysis relies on a unique cross-country micro-based dataset of exporters available for 11 European countries (2001- 2011), which details in particular information about firms' productivity and export performance. Our results show that while the average exchange rate elasticity across firms is quite weak, it is also highly heterogeneous. The least productive ..rms within each country and sector tend to react more to real exchange rate movements than the most productive firms. This weak reaction of highly productive and large exporters tends to reduce the macroeconomic exchange rate elasticity in all countries. Cross-country di..erences in the shape of the productivity distribution among exporters have a strong influence on the macroeconomic exchange rate elasticity: countries populated with a higher density of low productive firms tend to respond more to exchange rate movements in terms of aggregate exports than countries populated with highly productive exporters.
Subjects: 
Firm-level exports
heterogeneity
exchange rates movements
JEL: 
F12
F14
F31
Document Type: 
Working Paper
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