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Exchange Rate Volatility, Financial Constraints and Trade: Empirical Evidence from Chinese Firms

  • Jérôme Héricourt
  • Sandra Poncet

This paper studies how firm-level export performance is affected by RER volatility and investigates whether this effect depends on existing financial constraints. Our empirical analysis relies on export data for more than 100,000 Chinese exporters over the period 2000-2006. We confirm a trade-deterring effect of RER volatility. We find that firms tend to export less and fewer products to destinations with higher exchange rate volatility and that this effect is magnified for financially vulnerable firms. As expected, financial development does seem to dampen this negative impact, especially on the intensive margin of export.

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Paper provided by CEPII research center in its series Working Papers with number 2012-35.

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Date of creation: Dec 2012
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Handle: RePEc:cii:cepidt:2012-35
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