Venting Out: Exports During a Domestic Slump / Miguel Almunia, Pol Antràs, David Lopez-Rodriguez, Eduardo Morales.

Format:

Book

Author/Creator:

Almunia, Miguel.

Contributor:

National Bureau of Economic Research.

Antràs, Pol.

Lopez-Rodriguez, David.

Morales, Eduardo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25372.

NBER working paper series no. w25372

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Venting Out

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

We exploit plausibly exogenous geographical variation in the reduction in domestic demand caused by the Great Recession in Spain to document the existence of a robust, within-firm negative causal relationship between demand-driven changes in domestic sales and export flows. Spanish manufacturing firms whose domestic sales were reduced by more during the crisis observed a larger increase in their export flows, even after controlling for firms' supply determinants (such as labor costs). This negative relationship between demand-driven changes in domestic sales and changes in export flows illustrates the capacity of export markets to counteract the negative impact of local demand shocks. We rationalize our findings through a standard heterogeneous-firm model of exporting expanded to allow for non-constant marginal costs of production. Using a structurally estimated version of this model, we conclude that the firm-level responses to the slump in domestic demand in Spain could well have accounted for around one-half of the spectacular increase in Spanish goods exports (the so-called 'Spanish export miracle') over the period 2009-13.

Notes:

Print version record

December 2018.