Venting Out: Exports During a Domestic Slump

Miguel Almunia, Pol Antrà s, David Lopez-Rodriguez and Eduardo Morales
Additional contact information
Pol Antrà s: Harvard University
David Lopez-Rodriguez: Banco de España
Eduardo Morales: Princeton University

Working Papers from Princeton University. Economics Department.

Abstract: 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.

Keywords: Spain; Europe; Exports; Manufacturing; Recession (search for similar items in EconPapers)
JEL-codes: D22 E32 F14 L60 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ban, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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https://scholar.harvard.edu/files/antras/files/venting_aalm_latest_draft.pdf

Related works:
Journal Article: Venting Out: Exports during a Domestic Slump (2021)
Working Paper: Venting out: exports during a domestic slump (2018)
Working Paper: Venting Out: Exports During a Domestic Slump (2018)
Working Paper: Venting Out: Exports During a Domestic Slump (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2021-83

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