Exchange Rate Effects on Agricultural Exports: Transaction‐Level Evidence from Pakistan
2020
Khan, Salamat Ali
This article examines the effects of domestic currency depreciation on agricultural exports from Pakistan including the responses of price and quantity margins. It uses highly disaggregated firm‐level data that contains the exchange rates of the actual currencies of invoicing at the transaction level. The study finds that the currency depreciation positively affects both intensive and extensive margins. The intensive margin increase in agricultural exports operates mainly through prices, whereas the response of quantities is relatively smaller. Moreover, depreciation improves the extensive margins of firms and products and expands the client base in existing markets. These responses vary widely across firms' exporting experience, trade orientation, sectoral and spatial distribution, exchange rate regimes, and invoicing currencies.
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