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Firm survival, performance, and the exchange rate

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  • Jen Baggs
  • Eugene Beaulieu
  • Loretta Fung

Abstract

This paper examines the impact of exchange rate movements on firm survival and sales. We exploit detailed Canadian firm-level data from 1986 to 1997, a period in which the Canadian dollar appreciated approximately 30% in the first six years and depreciated 30% in the later six years. We find that survival and sales are negatively associated with appreciations in the Canadian dollar. The impact on survival is less pronounced for more productive firms. The magnitude of the impact of exchange rate changes on firm survival and sales was comparable to the effect of CUSFTA-mandated tariff changes.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 42 (2009)
Issue (Month): 2 (May)
Pages: 393-421

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Handle: RePEc:cje:issued:v:42:y:2009:i:2:p:393-421

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Cited by:
  1. Marina-Eliza Spaliara & Serafeim Tsoukas, 2009. "The role of bond finance in firms' survival during the Asian crisis," Discussion Paper Series 2009_17, Department of Economics, Loughborough University.
  2. Heiwai Tang & Yifan Zhang, 2011. "Exchange Rates and the Margins of Trade: Evidence from Chinese Exporters," Working Papers 392011, Hong Kong Institute for Monetary Research.
  3. David UMORU & Adaobi S. OSEME, 2013. "Trade Flows and Exchange Rate Shocks in Nigeria: An Empirical Result," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(7), pages 948-977, July.
  4. Spaliara, Marina-Eliza & Tsoukas, Serafeim, 2013. "What matters for corporate failures in Asia? Exploring the role of firm-specific characteristics during the Asian crisis," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 83-96.
  5. Azam Chaudhry & Marjan Nasir & Maryiam Haroon, 2012. "The Birth of Exporters: Entry and Scale of Firms in Punjab’s Export Sectors," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(Special E), pages 191-212, September.
  6. John Baldwin & Beiling Yan, 2011. "The death of Canadian manufacturing plants: heterogeneous responses to changes in tariffs and real exchange rates," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 147(1), pages 131-167, April.
  7. Ekholm, Karolina & Moxnes, Andreas & Ulltveit-Moe, Karen Helene, 2012. "Manufacturing restructuring and the role of real exchange rate shocks," Journal of International Economics, Elsevier, vol. 86(1), pages 101-117.

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