Abstract

This paper studies how the number of categories exported by countries is related to the level and the volatility of the exchange rate. The results show that export variety is positively related to a weaker exchange rate and negatively related to exchange rate volatility. These relationships appear to be stronger for goods with higher technological intensity. Using data for a long panel of countries, the paper investigates these relationships using a methodology that allows for heterogeneous coefficients across countries and discusses two sources of bias that are often overlooked.