Exporters and Shocks

Doireann Fitzgerald and Stefanie Haller

No 549, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We use micro data for Ireland to estimate how export participation and the export revenue of incumbent exporters respond to tariffs and real exchange rates. Both participation and revenue, but especially revenue, are more responsive to tariffs than to real exchange rates. Our estimates translate into an elasticity of aggregate exports with respect to tariffs of between -3.8 and -5.4, and with respect to real exchange rates of between 0.45 and 0.6, consistent with estimates in the literature based on aggregate data. We argue that forward-looking investment in customer base combined with the fact that tariffs are much more predictable than real exchange rates can explain why export revenue responds so much more to tariffs.

Keywords: Tariffs; Real exchange rates; International elasticity puzzle (search for similar items in EconPapers)
JEL-codes: F14 F41 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2017-05-18
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (3)

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Journal Article: Exporters and shocks (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:549

DOI: 10.21034/sr.549

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