Exchange Rates and Export Structure

This paper studies whether changes in the exchange rate aect a country's export structure, using an arguably exogenous sudden appreciation of renminbi on July 21, 2005 as the main source of identi…cation. Employing combined regression discontinuity and dierence-in-dierences approach, we show that China's export structure became more similar to that of the developed countries after the currency appreciation. We also …nd that the majority of the appreciation eect comes from the inter-…rm resource reallocation rather than the inter-region or intra-…rm resource reallocation.