The paper "Exchange Rate Movement, Financial Constraints and Exporter’s R&D", written by Professor Yaqi WANG of the School of Finance and Bing LU who is a doctoral student of Tsinghua University, was published in the 7th issue of "The Journal of World Economy" in 2018. Bing LU was an undergraduate student of cohort 2012 in the School of Finance and also a trainee of the third "Distinguished Academic Talents Training Project".

Abstract: Based on the highly disaggregated firm-level data from 2000 to 2007, we investigate the influence of exchange rate movement on Chinese manufacturing exporters’ R&D expenditure, and further study the heterogeneous responses of firms under different levels of financial constraints. We demonstrate that the appreciation of firm-level real effective exchange rate (REER) contributes significantly to exporters’ R&D expenditure, especially for those that are less financially constrained. Further studies indicate that the competition channel and the intermediate input imports are two possible explanations for the main results. Our paper provides micro evidence of the important role of a better financial environment for exporters’ R&D activities.

Keywords: exchange rate movement; financial constraints; exporters; R&D expenditure