Exporters’ behaviour in the face of climate volatility

Alex Bao, Philippe Bontems, Jean-Marie Cardebat and Raphael Chiappini

No 24-1552, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This study examines how exporters make export decisions when faced with production and demand shocks. Using a unique dataset of French wine shipments from 2001 to 2020 across 134 Protected Denomination of Origin (PDO) regions, and daily weather data from M´et´eo-France, we employ gravity estimations to show that extreme weather affects both trade intensive and extensive margins, while favorable weather boosts them. A heterogeneity analysis reveals that exports to core markets are less sensitive than peripheral markets to extreme weather, indicating market prioritization by exporters. Our theoretical analysis explains how climate-induced production shock volatility shapes export behavior, leading firms to reallocate resources to most attractive markets and streamline their destination markets portfolios by exiting less favorable ones.

JEL-codes: F12 F18 Q18 Q56 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-env and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:129521

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