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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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  • Jen Baggs & Eugene Beaulieu & Loretta Fung, 2009. "Firm survival, performance, and the exchange rate," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 393-421, May.
  • Handle: RePEc:cje:issued:v:42:y:2009:i:2:p:393-421
    DOI: 10.1111/j.1540-5982.2009.01513.x
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