University of Mannheim
Department of Economics
L7, 3-5, 68131 Mannheim, Germany
Institutional Affiliation: University of Mannheim
NBER Working Papers and Publications
|May 2018||The Real Exchange Rate, Innovation and Productivity: Heterogeneity, Asymmetries and Hysteresis|
with Laura Alfaro, Alejandro Cuñat, Harald Fadinger: w24633
We evaluate manufacturing firms' responses to changes in the real exchange rate (RER) using detailed firm-level data for a large set of countries for the period 2001-2010. We uncover the following stylized facts about regional variation of manufacturing firms' integration into global value chains: firms in emerging Asia are very export oriented relative to their dependence on imported intermediates; firms from Latin America and Eastern Europe depend heavily on imported intermediates compared to their export orientation; firms from high-income countries export on average as much as they import. Motivated by these facts, we build a dynamic model in which real depreciations raise the cost of importing intermediates, affect export demand, borrowing-constraints and the profitability of engaging...