New exporter dynamics

Kim Ruhl and Jonathan Willis

No RWP 14-10, Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: Models in which heterogeneous plants face sunk export entry costs are standard tools in the international trade literature. How well do these models account for the observed dynamics of new exporters? We document that new exporters initially export small amounts and ? conditional on continuing in the export market ? grow gradually over several years. New exporters are most likely to exit the export market in their first few years. We construct a dynamic discrete choice model of exporting and find that the standard model cannot replicate the behavior of new exporters: New exporters grow too large too quickly and live too long. We assess the quantitative importance of accounting for new exporter dynamics by extending the model to account for these facts. In this model, the present value of exporting falls relative to the baseline model. As a result, the entry costs needed to account for the data are three times smaller than in the baseline model

Pages: 25 pages
Date: 2014-11-01
New Economics Papers: this item is included in nep-dcm, nep-dge and nep-int
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Citations: View citations in EconPapers (20)

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Related works:
Journal Article: NEW EXPORTER DYNAMICS (2017)
Working Paper: New Exporter Dynamics (2009)
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