Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80832
Authors: 
Lassmann, Andrea
Year of Publication: 
2013
Series/Report no.: 
KOF Working Papers, KOF Swiss Economic Institute, ETH Zurich 331
Abstract: 
This paper analyses how exchange rate shocks are transmitted at the firm level and establishes a nexus to firm-level export activity. Using precise survey data from a sample of Swiss firms, I find that an appreciation increases the probability of a decrease in firm-level costs, prices and profits. Exchange rate movements are passed through to import prices, absorbed in firm selling prices and lead to adjustments in firm profits. The pattern is non-linear across firms with a varying degree of international exposure. The likelihood of adjustments is increasing in firm-level export share in total turnover. I also show that exchange rate variability affects adjustment probabilities. The analysis suggests that Swiss firms take prices as given. Exchange rate shocks are absorbed through a reduction in both costs and prices, however, these adjustments are not proportional such that overall profits decline during appreciation periods.
Subjects: 
exchange rate
exchange rate pass-through
market structure
firm-level data
costs
local prices
profits
exports
JEL: 
D22
D4
E31
F14
F31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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