Export Dynamics in Large Devaluations

Vivian Yue, Sangeeta Pratap and George Alessandria

No 1067, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: We study export dynamics in a number of large devaluation episodes in emerging markets. Using plant level data, we document that exports expand gradually following a large devaluation primarily because the number of exporters expands gradually. We show that a model of exporter dynamics with sunk and fixed costs of exporting and idiosyncratic productivity shocks can generate most of the gradual rise in export participation from aggregate productivity shocks and global interest rate shocks. Countercyclical interest rates lower the present value of exporting following the devaluation discouraging exporting and partially o¤setting the effect on trade from the change in relative prices. We conclude there is a small role for credit frictions in explaining the gradual rise in trade and export participation.

Date: 2010
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Related works:
Working Paper: Export dynamics in large devaluations (2013)
Working Paper: Export dynamics in large devaluations (2013)
Working Paper: Export Dynamics in Large Devaluations (2013)
Working Paper: Export Dynamics in Large Devaluations (2012)
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