Exports, Imported Inputs, and Domestic Supply Networks

Yusuf Emre Akgunduz and Salih Fendoglu ()

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: Exporters have large domestic supply networks. We examine the impact of import reliance within their domestic supply networks on exchange rate pass-through to export prices and volume. For identification, we use administrative firm-to-firm sales and firm-product-destination level customs databases from a large emerging market, Turkey. We find that (i) while exporters' degree of reliance on imported goods is 24\%, this number reaches nearly 45\% once their suppliers are taken into account; (ii) following a domestic currency depreciation, exporters that use imported inputs more or those working with import-intensive suppliers raise their producer-currency export prices significantly more and increase their export volumes significantly less; (iii) exporters with higher reliance on a single supplier have higher exchange rate pass-through to export prices; and (iv) exporters with higher overall import intensity experience greater disruption in their supply networks, e.g., they establish fewer new supplier linkages and terminate more of their existing linkages, following a domestic currency depreciation.

Keywords: Exchange rate pass-through; Exports; Import reliance; Domestic supply networks (search for similar items in EconPapers)
JEL-codes: D24 F14 F31 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ara, nep-bec, nep-int and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1908

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