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Exchange rate fluctuations and the margins of exports

Author

Listed:
  • Fabling, Richard
  • Sanderson, Lynda

Abstract

This paper examines the relationship between exchange rate fluctuations and New Zealand export performance. To isolate the impact of the exchange rate, as opposed to contemporaneous (and related) fluctuations in New Zealand's economic performance or overseas market characteristics, we focus on bilateral export relationships at the firm level and control for both time-invariant country characteristics and changes in aggregate economic conditions. We examine two key margins of export adjustment – the probability of exporting (the extensive margin) and the average value of exports per firm (the intensive margin) – and distinguish between impacts on market incumbents and new or potential entrants. Finally, we specifically take account of the potential for interaction between the level and volatility of the exchange rate to affect exporting, as implied by theories of exchange rate hysteresis.

Suggested Citation

  • Fabling, Richard & Sanderson, Lynda, 2015. "Exchange rate fluctuations and the margins of exports," Motu Working Papers 290595, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:290595
    DOI: 10.22004/ag.econ.290595
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    Cited by:

    1. is not listed on IDEAS
    2. Bernabe Lopez‐Martin, 2022. "Firm Export Dynamics And The Exchange Rate: A Quantitative Exploration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 1137-1163, August.
    3. Lynda Sanderson, 2016. "Barriers to Generating International Income: Evidence from the Business Operations Survey," Treasury Working Paper Series 16/04, New Zealand Treasury.
    4. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.

    More about this item

    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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