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Export decision under risk

Décision d’exportation en environnement risqué

José Claude de Sousa (), Anne-Celia Disdier () and Carl Gaigne
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José Claude de Sousa: ECO-PUB - Economie Publique - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Université Paris-Saclay
Anne-Celia Disdier: PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique

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Abstract: We show that economic uncertainty in foreign markets affects firms' economic decisions, particularly those of the most productive firms. Using export data at both the industry and firm levels, we uncover two empirical regularities. First, demand uncertainty in foreign markets affects export entry/exit decisions (extensive margin) and export sales (intensive margin). If all destination countries exhibited the lowest volatility observed across destinations, then total French exports would rise by approximately 18% (an increase primarily driven by the extensive margin). Second, the most productive exporters are more affected by a higher industry-wide expenditure volatility than are the least productive exporters. The 25% most productive firms export, on average, 27% more in value than the 25% least productive firms in less volatile markets, while this difference decreases to 12% in the most volatile markets.

Keywords: firm export; demand uncertainty; risk aversion; expenditure volatility; skewness (search for similar items in EconPapers)
Date: 2020
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-02624746
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Published in European Economic Review, Elsevier, 2020, 121, ⟨10.1016/j.euroecorev.2019.103342⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02624746

DOI: 10.1016/j.euroecorev.2019.103342

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