Dr. Kwan Young Lee presented his research “Exchange Rates, Foreign-Currency Debuts and the Margins of Exports: Firm-Level Evident” at The Western Economic Association International Conference on June 28 – July 2, 2019 in San Francisco, California.
Authors on the paper included Kwan Young Lee (University of North Dakota) and Kanda Naknoi (University of Connecticut).
This study empirically examines the eﬀects of currency depreciation on the exporting ﬁrms’ borrowing costs and exports. Using Korean data, ﬁrst we ﬁnd novel evidence that unanticipated currency depreciation increases the ﬁrm-level real interest rate for ﬁrms in sectors importing intermediate inputs. Next, we show that currency depreciation has contractionary eﬀects of rising costs of borrowing and imported inputs, and an expansionary eﬀect of an improvement in price competitiveness. The overall eﬀect of currency depreciation on exports is found to be contractionary, and our estimation has captured the eﬀects of large ﬁnancial shocks during ﬁnancial crises.