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The impact of exchange rate movements on multi-product firms' export performance: Evidence from China

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  • Xu, Jiayun
  • Mao, Qilin
  • Tong, Jiadong

Abstract

This paper investigates the effects of RMB exchange rate movements on Chinese multi-product firms' export behavior using China's firm-level micro data and highly disaggregated customs data over 2000–2007. We find that real appreciation of RMB exerts negative effects on Chinese multi-product firms' export prices and export quantities, and the effects are significantly different across firms with different productivity as well as the product ladder within multi-product firms. In addition, we document that real appreciation of RMB narrows multi-product firms' export scope and induces firms to skew their export sales towards the best performing products. Finally, the paper explores the effects of RMB exchange rate movements on firms' export duration, and shows that real appreciation of RMB lengthens the export duration of core products but shortens the export duration of non-core products.

Suggested Citation

  • Xu, Jiayun & Mao, Qilin & Tong, Jiadong, 2016. "The impact of exchange rate movements on multi-product firms' export performance: Evidence from China," China Economic Review, Elsevier, vol. 39(C), pages 46-62.
    • Handle: RePEc:eee:chieco:v:39:y:2016:i:c:p:46-62
    DOI: 10.1016/j.chieco.2016.04.003
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    Cited by:

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    4. Wang, Jingwen & Shen, Guangjun & Tang, Dunzhe, 2021. "Does tax deduction relax financing constraints? Evidence from China's value-added tax reform," China Economic Review, Elsevier, vol. 67(C).
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    6. Michael Irlacher, 2022. "Multi-product Firms in International Economics," Economics working papers 2022-01, Department of Economics, Johannes Kepler University Linz, Austria.
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    8. Bing Lu & Yaqi Wang & Xiaofen Tan, 2020. "Exchange Rate Volatility, Heterogeneous Firms and Market Concentration," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(4), pages 51-75, July.

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    More about this item

    Keywords

    RMB exchange rate; Product ladder; Product scope; Export duration;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F10 - International Economics - - Trade - - - General

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