Real exchange rate shocks and new product margins in the export market |
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Authors: | Chin Hee Hahn Ju Hyun Pyun |
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Institution: | 1. Department of Economics, Gachon University, Seongnam, Korea;2. Korea University Business School, Seoul, Korea |
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Abstract: | This study examines the impact of industry real exchange rate (RER) shocks on plant and product exports using a comprehensive dataset for South Korea from 1990 to 1996. We find that RER changes have heterogeneous effects on real exports of existing exporters in terms of their productivity, and the positive RER depreciation effect on exports is more pronounced for less productive plants. At a product level, we find new evidence that a weak home currency prompts exporters to introduce new products to the export market, especially more remarkable for low-productivity plants. In contrast, a strong home currency leads to product exit with less significance. |
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Keywords: | emerging market hysteresis multi-product firms plant product variety productivity real exchange rate sunk costs |
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