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Author
Date
2013Type
- Working Paper
ETH Bibliography
yes
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Abstract
This paper analyses how exchange rate shocks are transmitted at the firm level and establishes a nexus to firm-level export activity. Using precise survey data from a sample of Swiss firms, I find that an appreciation increases the probability of a decrease in firm-level costs, prices and profits. Exchange rate movements are passed through to import prices, absorbed in firm selling prices and lead to adjustments in firm profits. The pattern is non-linear across firms with a varying degree of international exposure. The likelihood of adjustments is increasing in firm-level export share in total turnover. I also show that exchange rate variability affects adjustment probabilities. The analysis suggests that Swiss firms take prices as given. Exchange rate shocks are absorbed through a reduction in both costs and prices, however, these adjustments are not proportional such that overall profits decline during appreciation periods. Show more
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https://doi.org/10.3929/ethz-a-007623291Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
EXPORT (FOREIGN TRADE); Exchange rate; Local prices; Market structure; COST-BENEFIT ANALYSIS (ECONOMY); Costs; SCHWEIZ (MITTELEUROPA). SCHWEIZERISCHE EIDGENOSSENSCHAFT; Exports; SWITZERLAND (CENTRAL EUROPE). SWISS CONFEDERATION; KOSTEN-NUTZEN-ANALYSE (WIRTSCHAFT); AUSFUHR + EXPORT (AUSSENHANDEL); Profits; Exchange rate pass-through; WECHSELKURS; EXCHANGE RATE; Firm-level dataOrganisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
Notes
See also: http://e-citations.ethbib.ethz.ch/view/pub:98069.More
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ETH Bibliography
yes
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