Exporters and Shocks: Dissecting the International Elasticity Puzzle

Doireann Fitzgerald · Stefanie A. Haller

34 citations0/0 files storedNational Bureau of Economic Research

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Global trade and economics International Business and FDI Economic and Technological Innovation

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.

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References

1989Entry and Exit Decisions under Uncertainty 2008Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?n.d.The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs.2004Why Some Firms Export 2011Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms 2011An Anatomy of International Trade: Evidence From French Firms 1989Persistent Trade Effects of Large Exchange Rate Shocks 2008Pricing-to-Market, Trade Costs, and International Relative Prices

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