Product Adjustments: A Firm-Level Analysis of the Impact of a Real Exchange Rate Shock

23 Pages Posted: 19 Jul 2010

See all articles by Andreas Moxnes

Andreas Moxnes

University of Oslo - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Karen Helene Ulltveit-Moe

University of Oslo - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: July 2010

Abstract

Using a new and extensive micro data set we investigate the impact of a change in international competitive pressure following a real exchange shock on multi-product firms' product mix. We only find weak evidence for the core competencies hypothesis, according to which, we would expect the exposed firms to reduce their product portfolio in response to the shock. But firms exposed to the shock significantly reduced their rate of product churning, relative to the control group of nonexposed firms. Moreover, we find a strong positive link between churning in the range of imported and exported products, suggesting that the product mix of imported inputs may be an important, but less understood, margin of adjustment.

Keywords: firm restructuring, heterogeneous firms, product differentiation, real exchange rate shock

JEL Classification: F12, F14, F31, L16

Suggested Citation

Moxnes, Andreas and Ulltveit-Moe, Karen Helene, Product Adjustments: A Firm-Level Analysis of the Impact of a Real Exchange Rate Shock (July 2010). CEPR Discussion Paper No. DP7923, Available at SSRN: https://ssrn.com/abstract=1640999

Andreas Moxnes (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Karen Helene Ulltveit-Moe

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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