Firm‐Level Heterogeneity and the Aggregate Exchange Rate Effect on Exports

13 Pages Posted: 8 Sep 2016

See all articles by Robert Dekle

Robert Dekle

University of Southern California - Department of Economics

Hyeok Jeong

Seoul National University

Heajin Ryoo

University of Southern California - Department of Economics

Date Written: September 2016

Abstract

We investigate what accounts for the different evidence between the aggregate and firm‐level data on the exchange rate elasticity of exports. The typical estimation of the macroeconomic export equations gives insignificant estimates for this elasticity compared to those from the recent firm‐level estimation. Using firm‐level data from Japan, we identify the sources of this discrepancy, and show that the failure to account for cost and demand factors as well as firm‐level productivity induces various kinds of biases for the aggregate estimate of the exchange rate elasticity of exports.

Suggested Citation

Dekle, Robert and Jeong, Hyeok and Ryoo, Heajin, Firm‐Level Heterogeneity and the Aggregate Exchange Rate Effect on Exports (September 2016). Economic Record, Vol. 92, Issue 298, pp. 435-447, 2016. Available at SSRN: https://ssrn.com/abstract=2836246 or http://dx.doi.org/10.1111/1475-4932.12276

Robert Dekle (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States
213-740-8335 (Phone)

Hyeok Jeong

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

Heajin Ryoo

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

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