The Effect of Exchange Rate Volatility on Productivity of Korean Manufacturing Plants: Market Average Rate Regime vs Free Floating
Bo-Young, CHOI; Hyun, PYUN Ju | October 2016
Abstract
This study examines how exchange rate volatility can influence total factor productivity (TFP) invarious dimensions. Using Korean manufacturing plant-level data for 1990-2007, we first compare and contrast the effects of exchange rate volatility on TFPs between two different exchange rate regimes—pegged and free floating. We find that the exchange rate volatility had a negative effect on productivity in both regimes but this negative effect was greater during the period when exchange rate fluctuation was restricted, compared to the period with free floating rate. We also find that the negative effects of the volatility on productivity were heterogeneous over TFP quantiles and exhibited an inverted W-shape curve. In particular, the negative effects were more pronounced for exporting plants that had the lowest or highest TFPs.
Citation
Bo-Young, CHOI; Hyun, PYUN Ju. 2016. The Effect of Exchange Rate Volatility on Productivity of Korean Manufacturing Plants: Market Average Rate Regime vs Free Floating. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/6813.PDF ISBN
978-89-322-4259
Keywords
ADB
Project finance
Development plans
Strategic planning
Business Financing
Investment Requirements
Insurance Companies
International Monetary Relations
International Financial Market
Exchange Rate
Development
Finance
Development Challenges
Development Issues
Development Problems
Microenterprises Finance
Commercial Finance Companies
Enterprise Financing
Financial Analysis
Banking Finance And Investment
Insurers
Insurance stocks
Insurance holding companies
Insurance carriers
Insurance agencies
Business subsidies
Investment companies
International banks and banking
Stock exchanges
Grants
Loans
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