Working Paper: CEPR ID: DP15524
Authors: Tewodros Gebrewolde; Michael Koelle; Pramila Krishnan; Andualem Telaye Mengistu
Abstract: We examine the links between currency shocks and firm behaviour, with data from Ethiopia and Uganda, two countries with different exchange-rate regimes. We construct measures of currency shocks using matched customs and firm-level data, based on both theactual currency of invoicing and bilateral exchange rates. We find that currency depreciations based on the currency of invoicing to importers in Ethiopia lower the likelihood of using imported inputs, lower the share of imported inputs for firms, and lowers productivity.In contrast, there are no effects on any similar firm-level outcomes for Uganda. The use of bilateral currency shocks obtains confused results in both countries, signalling the value of using the currency of invoicing in this analysis.
Keywords: currency of invoicing; currency shocks
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| currency depreciation (F31) | lower likelihood of using imported inputs (F14) |
| currency depreciation (F31) | reduced share of imported inputs (F14) |
| currency depreciation (F31) | decreased productivity (O49) |
| currency depreciation (F31) | reduced import activity (F10) |
| currency shocks (F31) | firm-level outcomes (L21) |