Do Sunk Costs of Exporting Matter for Net Export Dynamics?

George Alessandria and Horag Choi

The Quarterly Journal of Economics, 2007, vol. 122, issue 1, 289-336

Abstract: Firms start and stop exporting. Previous research suggests that these export participation decisions alter the comovement of net exports with the real exchange rate. We evaluate these predictions in a general equilibrium environment. Specifically, assuming firms face an up-front, sunk cost of entering foreign markets, and a smaller period-by-period continuation cost, we derive the discrete entry and exit decisions yielding exporter dynamics in an open economy business cycle model. The model's business cycle exporter dynamics are consistent with that of U.S. exporters. However, in contrast to previous partial equilibrium analyses, model results reveal that export decisions have negligible aggregate effects.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (227)

Downloads: (external link)
http://hdl.handle.net/10.1162/qjec.122.1.289 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Do sunk costs of exporting matter for net export dynamics? (2005)
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:oup:qjecon:v:122:y:2007:i:1:p:289-336.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().