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Multi-destination firms and the impact of exchange-rate risk on trade

Abstract : Based on a French firm-level database that combines information on balance-sheet and destination-specific export information over the period 1995–2009, we document a new stylized fact related to the heterogeneous reaction of exporters to RER volatility: we show that strongly multi-destination firms tend to reduce significantly more their exports to a destination that faces higher exchange-rate volatility. We also show that, following an exchange-rate volatility shock in a given country, strongly multi-destination firms increase exports to all other destinations served. This specific behavior of multi-destination firms has significant aggregate implications. First, the bilateral aggregate impact is increasingly negative with the weight of multi-destination firms in total exports towards the considered destination. Second, the reallocation behavior of large, multi-destination firms ultimately translates into stable total French exports (summed over all destinations).
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Contributor : Isabelle Celet <>
Submitted on : Tuesday, November 6, 2018 - 3:17:35 PM
Last modification on : Thursday, May 6, 2021 - 10:49:32 AM



Jérôme Héricourt, Clément Nedoncelle. Multi-destination firms and the impact of exchange-rate risk on trade. Journal of Comparative Economics, Elsevier, 2018, 46 (4), pp.1178-1193. ⟨10.1016/j.jce.2018.07.016⟩. ⟨hal-01913757⟩



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