@article{90d23dc07190481b95f7553b57ca31c4,
title = "Exchange Rate Policy and Firm Heterogeneity",
abstract = "This paper examines the exchange rate policy in a tractable framework with heterogeneous firms, incomplete financial markets and nominal rigidities. External demand shocks generate exchange rate movements leading to uncertainty in the labor demand of exporter firms. When exporter firms are homogeneous in terms of productivity, a monetary policy response to external demand shocks stabilizes the export market and improves welfare, thus providing a rationale for managed exchange rate policies.",
author = "Masashige Hamano and Francesco Pappad{\`a}",
note = "Funding Information: We thank the editor, two anonymous referees, Javier Bianchi, Aur{\'e}lien Eyquem, Fabio Ghironi, Oleg Itskhoki, Dennis Novy, Toshihiro Okubo, Facundo Piguillem, Tom Schmitz and seminar participants at Bank of England, Bank of Finland, Banque de France, CREST Ecole Polytechnique, GATE-Lyon II, HEC Lausanne, ISER Osaka, Waseda University, the AMSE-BdF Workshop, 4th BdF-BoE International Macroeconomics Workshop at Bank of England, Midwest International Trade (Spring 2019), E1Macro QMQM Queen Mary (2019), EEA-ESEM (2019), the 79th Annual Meeting of the JSIE (2020), ICMAIF (2021) and 38th EBES Conference (2022) for providing useful comments. The present project was supported by Grant-in-Aid for Scientific Research (C), JSPS 18K01521 and Murata Foundation Research Grant. Part of this work has been realized while Francesco Pappad{\`a} was visiting the Research Unit of Bank of Finland. Publisher Copyright: {\textcopyright} 2022, International Monetary Fund.",
year = "2022",
doi = "10.1057/s41308-022-00188-2",
language = "English",
journal = "IMF Staff Papers",
issn = "2041-4161",
publisher = "Palgrave Macmillan Ltd.",
}