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Currency Shocks and Firm Behaviour in Ethiopia and Uganda

Author

Listed:
  • Tewodros M Gebrewolde
  • Michael Koelle
  • Pramila Krishnan
  • Andualem T Mengistu

Abstract

We examine the links between currency shocks and firm behaviour, with data from Ethiopia and Uganda—two countries with different exchange-rate regimes. We construct measures of currency shocks using matched customs and firm-level data, based on both the actual currency of invoicing and bilateral exchange rates. We find that currency depreciation based on the currency of invoicing to importers in Ethiopia lower the likelihood of using imported inputs, lower the share of imported inputs for firms and lower productivity. In contrast, there are no effects on any similar firm-level outcomes for Uganda. The use of bilateral currency shocks obtains confused results in both countries, signalling the value of using the currency of invoicing in this analysis.

Suggested Citation

  • Tewodros M Gebrewolde & Michael Koelle & Pramila Krishnan & Andualem T Mengistu, 2022. "Currency Shocks and Firm Behaviour in Ethiopia and Uganda," Journal of African Economies, Centre for the Study of African Economies, vol. 31(Supplemen), pages 59-82.
    • Handle: RePEc:oup:jafrec:v:31:y:2022:i:supplement_1:p:i59-i82.
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    File URL: http://hdl.handle.net/10.1093/jae/ejac018
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    More about this item

    Keywords

    productivity; currency shock; firms; Ethiopia; JEL classification: D24; F14; F31;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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