The Influence Of Exchange Rate Movements On Heterogeneous Enterprises' Productivity

Since the reform of China's exchange rate system in 2005,the economic effect of RMB exchange rate fluctuation has been a pressing issue for researchers.The core to change the way of economic growth and realize the transformation from the Old to the New is to increase the contribution of enterprise productivity to economic growth.Based on the background,this paper investigate the effects and the channels of real exchange rate fluctuation on productivity growth of manufacturing firms in China.Firstly,we review and summarize the existing literature on Heterogeneous Enterprise Theory,Firm Heterogeneity,firms'productivity,and the influence mechanism of exchange rates on productivity.After that,we establish a theoretical model of the relationship between exchange rate fluctuations and enterprise productivity,and put forward the research related proposition,such as the effect of real exchange rate appreciation on productivity is negative.Secondly,the base database of the paper comes from Wind Database and CSMAR Database,after collating and matching,we get the all.sample for regression,there are 1,172companies and 7,602 pieces observations in this database.Based on the data of nominal exchange rates,we estimate the firms' TFP by using OLS and LP methods,and then carry out the typical facts analysis of total factor productivity of listed manufacturing companies,and find that:On the whole,The TFP of China's manufacturing listed companies shows a steady upward trend.The annual average productivity of large enterprises is higher than that of small and medium-sized enterprises.The annual average productivity of foreign-funded enterprises is higher than State-owned enterprises and private enterprises.The annual average productivity of export orientation is lower than domestic market enterprise.The annual average productivity of inland cities'enterprises is lower than coastal cities'enterprises.Thirdly,we use GMM regression method and mediating effect model to estimate the effects and channel of real exchange rate fluctuation on firms'productivity based on the full sample and subsample.Then we get the main conclusions of this paper:the real exchange rates movements do indeed have negative effects on firms' productivity,but these effects will vary from the heterogeneous features.More detailed,the negative effects of exchange rate on large enterprises is smaller than that of small and medium-sized enterprises,the negative effects of exchange rate on private enterprises is stronger than the State-owned enterprises and foreign-funded enterprises.Similarly,the export-oriented enterprises productivity is more easily influenced by the exchange rate movements.Compared to the inland cities' enterprise,the performance of the coastal cities'enterprises in resisting the risk of exchange rate uncertainty.At the same time,the exchange rate movements indeed both have direct effect and indirect effect on the firms' productivity,that means firms'R&D plays a role as partial intermediary.At last,based on the research conclusions of this paper,we give the relevant policy suggestions for the government and firms.