Advanced Search
MyIDEAS: Login

Firm Survival, Performance, and the Exchange Rate

Contents:

Author Info

  • Jen Baggs
  • Eugene Beaulieu

    (University of Calgary)

  • Loretta Fung
Registered author(s):

    Abstract

    Large real exchange rate movements may affect the real eocnomy in a manner comparable to significant episodes of tariff changes. This paper conducts a firm level analysis of the impact of exchange rate movements on firm survival, sales and industry entry rates. Our empirical analysis exploits a detailed set of Canadian firm level data from 1986 to 1997 during which the Canadian dollar experienced an approximately 30% appreciation in the first six years and 30% depreciation in the later six years. These reciprocal movements in the Canadian dollar offer an excellent opportunity to investigate the consequences of lare exchange rate movements for domestic firms. We find that survival, sales and entry are negatively associated with appreciations in the Canadian dollar. The impact on survival is less pronounced for more productive firms. We find that over our sample period, the magnitude of the impact of exchange rate changes on firm survival, sales, and entry were considerably larger than the effect of CUSTA mandated tariff changes.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://econ.ucalgary.ca/sites/econ.ucalgary.ca/files/unitis/publications/162-34036/beaulieuwp04.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Department of Economics, University of Calgary in its series Working Papers with number 2007-04.

    as in new window
    Length:
    Date of creation: 26 Oct 2007
    Date of revision: 26 Oct 2007
    Handle: RePEc:clg:wpaper:2007-04

    Contact details of provider:
    Postal: 2500 University Drive N.W., Calgary, Alberta, T2N 1N4
    Phone: (403) 220-5857
    Fax: (403) 282-5262
    Web page: http://econ.ucalgary.ca/
    More information through EDIRC

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Yan, Beiling, 2002. "Purchasing Power Parity: A Canada/U.S. Exploration," Economic Analysis (EA) Research Paper Series 2002002e, Statistics Canada, Analytical Studies Branch.
    2. Loretta Fung, 2008. "Large real exchange rate movements, firm dynamics, and productivity growth," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 391-424, May.
    3. Pavcnik, Nina, 2002. "Trade Liberalization, Exit, and Productivity Improvement: Evidence from Chilean Plants," Review of Economic Studies, Wiley Blackwell, vol. 69(1), pages 245-76, January.
    4. Eugene Beaulieu, 1998. "The Canada-U.S. Free Trade Agreement and Labour Market Adjustment in Canada," Working Papers 1998-11, Department of Economics, University of Calgary, revised 02 Oct 1998.
    5. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April.
    6. Jen Baggs & James A Brander, 2006. "Trade liberalization, profitability, and financial leverage," Journal of International Business Studies, Palgrave Macmillan, vol. 37(2), pages 196-211, March.
    7. Feenstra, Robert C., 1989. "Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test," Journal of International Economics, Elsevier, vol. 27(1-2), pages 25-45, August.
    8. Campa, Jose & Goldberg, Linda S., 1995. "Investment in manufacturing, exchange rates and external exposure," Journal of International Economics, Elsevier, vol. 38(3-4), pages 297-320, May.
    9. Robert Feenstra & Paul Bergin, 2003. "Pricing To Market, Staggered Contracts, And Real Exchange Rate Persistence," Working Papers 991, University of California, Davis, Department of Economics.
    10. Bergin, Paul R. & Feenstra, Robert C., 2000. "Staggered price setting, translog preferences, and endogenous persistence," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 657-680, June.
    11. Jen Baggs, 2005. "Firm survival and exit in response to trade liberalization," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1364-1383, November.
    12. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:clg:wpaper:2007-04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (May Ives).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.