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Quality, Trade, and Exchange Rate Pass-Through, Natalie Chen, Luciana Juvenal

This paper investigates theoretically and empirically the heterogeneous response of exporters to real exchange rate fluctuations due to product quality. Our model shows that the elasticity of demand perceived by exporters decreases with a real depreciation and with quality, leading to more pricing-to-market and to a smaller response of export volumes to a real depreciation for higher quality goods. We test the proposed theory using a highly disaggregated Argentinean firm-level wine export dataset between 2002 and 2009 combined with experts wine rankings as a measure of quality. The model predictions find strong support in the data and the results are robust to different measures of quality, samples, specifications, and to the potential endogeneity of quality
Table Of Contents
Cover; Contents; I. Introduction; II. A Model of Pricing-to-Market and Quality; A. The Basic Framework; B. Cross-Country Heterogeneity in the Preference for Quality; III. Data and Descriptive Statistics; A. Firm-Level Exports Customs Data; B. Quality Ratings; C. Macroeconomic Data; IV. Wine and Model Assumptions; V. Empirical Framework; A. Baseline Results; B. Heterogeneity across Destination Countries; C. Aggregation Bias; VI. Robustness; A. The Measurement of Quality; B. The Endogeneity of Quality; C. Asymmetries; D. Sample Periods; E. Extensive Margin; F. The US Dollar
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (59 p.)
Specific Material Designation
Form Of Item

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