Venting Out: Exports during a Domestic Slump
- American Economic Review (Forthcoming)
We study the relationship between domestic-demand shocks and
exports, using data for Spanish manufacturing firms in 2002–13.
Exploiting plausibly exogenous geographical variation caused by the
Great Recession, we find that firms whose domestic sales declined
more experienced a larger increase in export flows, controlling for firms' supply determinants. This result illustrates the capacity of export markets to counteract the negative impact of local demand
shocks. By structurally estimating a heterogeneous-firm model of
exporting with non-constant marginal costs of production, we conclude
that these firm-level responses accounted for half of the spectacular
increase in Spanish goods exports over the period 2009–13.
Forthcoming Article Downloads