How Multi-Destination Firms Shape the Effect of Exchange Rate Volatility on TradePost, June 14, 2016
By Jérôme Héricourt, Clément Nedoncelle
The idea that exchange rate volatility could be detrimental to international trade is widely accepted. Surprisingly, macroeconomic evidence on its impact on trade yields either small or insignificant effect on aggregate outcomes. This column suggests that the behavior of big, multi-destination firms help explain this puzzle.