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Exchange Rates and Exports: Evidence from Manufacturing Firms in the UK

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  • David Greenaway,
  • Richard Kneller,
  • Xufei Zhang

Abstract

Our focus is the effects of exchange rate movements on firm decisions on export market entry and exit and export intensity. The analysis breaks down export adjustments between changes in export share by existing exporters and changes due to entry to and exit from export markets. Using data on a large sample of UK manufacturing firms, we find that exchange rate movements have little effect on firm's export participation and exit decisions. However, they do have a significant impact on export shares after entry. The responsiveness of the export share to exchange rate changes is not quantitatively small: one index point depreciation in the REER index will increase export share by about 1.28 percent. We also investigate the effects of exchange rate movements on the export behavior of multinationals, and find their export behavior is less likely to be affected by exchange rate changes than that of indigenous firms.

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File URL: http://www.nottingham.ac.uk/gep/documents/papers/2007/07-13.pdf
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Bibliographic Info

Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 07/13.

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Handle: RePEc:not:notgep:07/13

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Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/
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Keywords: Exchange rate movements; export share; multinational firms;

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Cited by:
  1. David Greenaway & Richard Kneller & Xufei Zhang, . "Exchange Rate Uncertainty and Export Decisions in the UK," Discussion Papers 08/42, University of Nottingham, GEP.
  2. Thierry Mayer & Philippe Martin & Nicolas Berman, 2010. "How do different exporters react to exchange rate changes? Theory, empirics and aggregate implications," 2010 Meeting Papers 1338, Society for Economic Dynamics.
  3. Roberto �lvarez & Ricardo A. López, 2009. "Skill Upgrading and the Real Exchange Rate," The World Economy, Wiley Blackwell, vol. 32(8), pages 1165-1179, 08.

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