Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324872 
Year of Publication: 
2025
Series/Report no.: 
DICE Discussion Paper No. 426
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
This paper studies heterogeneous firm responses to a sudden trade-induced profitability shock - the 2015 Swiss franc appreciation. Using firm-level investment data and a novel measure of exposure, we document that this trade shock causes large and persistent investment declines among affected firms. Examining heterogeneous responses among firms with similar exposure, we find that differences in responsiveness are not explained by economic fundamentals but are strongly linked to firm age and managerial experience. Younger firms and those led by less experienced managers react substantially more strongly. We argue that these empirical patterns are consistent with a model of Bayesian learning, in which firms update their beliefs about profitability over time. The results provide important insights into the long-lasting effects of trade shocks on business dynamism, capital investment, and local employment.
Subjects: 
Trade shocks
Firm-level investment
Exchange rate shocks
JEL: 
F14
D22
G31
L25
ISBN: 
978-3-86304-425-1
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.