The Analysis Of The Impact Of Currency Fluctuation On Firm Productivity In The Market Structure Context

This paper incorporates the market structure measured by HHI into the theoretical model about real exchange rate and corporate productivity. Using panel data for empirical analysis, we find three main conclusions. Firstly, real exchange rate appreciation has a significantly negative effect on all kinds of firms. Secondly, real exchange rate appreciation significantly improves the productivity of non-export firms in less-competitive industries, but it decreases the productivity of firms involved in export, the extent of which is positively related to the industry HHI and the level of export dependence. Last but not least, using Heckman two-stage model, we find that currency appreciation greatly encourages corporate R&D and on-the-job training, which leads to productivity improvement.