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Working paper

Exchange Rate Fluctuations and the Margins of Exports (WP 15/08)

Issue date: 
Tuesday, 23 June 2015
View point: 
Publication category: 
JEL classification: 
F14 - Empirical Studies of Trade
F31 - Foreign Exchange
D22 - Firm Behavior: Empirical Analysis

Formats and related files

This paper examines the relationship between exchange rate fluctuations and New Zealand export performance.


This paper examines the relationship between exchange rate fluctuations and New Zealand export performance. To isolate the impact of the exchange rate, as opposed to contemporaneous (and related) fluctuations in New Zealand's economic performance or overseas market characteristics, we focus on bilateral export relationships at the firm level and control for both time-invariant country characteristics and changes in aggregate economic conditions. We examine two key margins of export adjustment - the probability of exporting (the extensive margin) and the average value of exports per firm (the intensive margin) - and distinguish between impacts on market incumbents and new or potential entrants. Finally, we specifically take account of the potential for interaction between the level and volatility of the exchange rate to affect exporting, as implied by theories of exchange rate hysteresis.


The authors wish to thank Statistics New Zealand for access to the data, and Christopher Ball, Richard Kneller, Oscar Parkyn and Mark Roberts for valuable comments and suggestions. Richard Fabling also thanks the Treasury for funding this research.


The results in this paper are not official statistics, they have been created for research purposes from the Integrated Data Infrastructure (IDI) managed by Statistics New Zealand. The opinions, findings, recommendations and conclusions expressed in this paper are those of the author(s) not Statistics NZ, the Treasury, or Motu Economic and Public Policy Research. Access to the anonymised data used in this study was provided by Statistics NZ in accordance with security and confidentiality provisions of the Statistics Act 1975. Only people authorised by the Statistics Act 1975 are allowed to see data about a particular person, household, business or organisation and the results in this paper have been confidentialised to protect these groups from identification.

Careful consideration has been given to the privacy, security and confidentiality issues associated with using administrative and survey data in the IDI. Further detail can be found in the Privacy impact assessment for the Integrated Data Infrastructure available from

The results are based in part on tax data supplied by Inland Revenue to Statistics NZ under the Tax Administration Act 1994. This tax data must be used only for statistical purposes, and no individual information may be published or disclosed in any other form, or provided to Inland Revenue for administrative or regulatory purposes.

Any person who has had access to the unit-record data has certified that they have been shown, have read, and have understood section 81 of the Tax Administration Act 1994, which relates to secrecy. Any discussion of data limitations or weaknesses is in the context of using the IDI for statistical purposes, and is not related to the data's ability to support Inland Revenue's core operational requirements.

Statistics NZ confidentiality protocols were applied to the data sourced from the New Zealand Customs Service. Any discussion of data limitations is not related to the data's ability to support these government agencies' core operational requirements.

Last updated: 
Tuesday, 27 October 2015