On domestic demand and export performance in the euro area countries: Does export concentration matter?

Paulo Esteves and Elvira Prades ()
Additional contact information
Elvira Prades: Banco de España

No 1719, Working Papers from Banco de España

Abstract: During economic downturns, weak domestic demand developments seem to be an additional driver of exports, as firms increase their efforts to serve markets abroad to compensate the fall in domestic sales. This may constitute an additional mechanism adjustment for the euro area countries where real exchange rate variations are limited by the common currency itself and the present low inflation environment. However, this substitution effect between domestic and foreign sales could be different across euro area members. This paper uses panel data techniques to assess the role of the export structure in explaining these differences. Building a novel indicator for product concentration, the results suggest that domestic demand developments are more relevant to explain exports in countries with a lower product concentration index (that is, more diversified exports). This contributes to explain why euro area countries under stress registered different economic performance during the most recent years.

Keywords: exports; domestic demand pressures; external adjustment (search for similar items in EconPapers)
JEL-codes: C22 E03 F10 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2017-05
New Economics Papers: this item is included in nep-eec, nep-int and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... /17/Fich/dt1719e.pdf First version, May 2017 (application/pdf)

Related works:
Working Paper: On domestic demand and export performance in the euro area countries: does export concentration matter? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1719

Access Statistics for this paper

More papers in Working Papers from Banco de España Contact information at EDIRC.
Bibliographic data for series maintained by Ángel Rodríguez. Electronic Dissemination of Information Unit. Research Department. Banco de España ().