Service Regulations, Input Prices and Export Volumes: Evidence from a Panel of Manufacturing Firms

38 Pages Posted: 3 Mar 2017

See all articles by Mónica Correa‐López

Mónica Correa‐López

BBVA Research – Ciudad BBVA

Rafael Doménech

University of Valencia - Department of Economic Analysis

Date Written: March 2, 2017

Abstract

Using a panel of firm-level data from Spanish manufacturers, this study shows that better service regulation reduces the price of intermediate inputs paid by downstream firms. The beneficial cost effects of services reforms extend to both large and small-to-medium sized corporations (SMEs), but the former tend to enjoy greater gains. This feature also manifests itself in international markets. We identify an input cost channel through which service regulations affect the volume of exports of large manufacturers, while the evidence of such channel is weaker for SMEs. Our estimates indicate that, from 1991 till 2007, large firms increased their volume of exports by an average of 22% as a result of the direct input cost effect of services reforms, such that the firms that benefited the most typically belonged to industries more dependent on service inputs. Furthermore, convergence to the “best practice” regulatory framework in services would have raised exports at least by an additional 10%. We conclude that firm size is relevant for the connection between services reforms, intermediate input prices and export volumes.

Keywords: Service Regulations, Intermediate Input Prices, Exports, Firm Size

JEL Classification: L11, L43, F14

Suggested Citation

Correa‐López, Mónica and Doménech, Rafael, Service Regulations, Input Prices and Export Volumes: Evidence from a Panel of Manufacturing Firms (March 2, 2017). Banco de Espana Working Paper No. 1707, Available at SSRN: https://ssrn.com/abstract=2926377 or http://dx.doi.org/10.2139/ssrn.2926377

Mónica Correa‐López (Contact Author)

BBVA Research – Ciudad BBVA ( email )

C/ Azul,4. Edificio La Vela. Planta 4
Madrid, 28050
Spain

Rafael Doménech

University of Valencia - Department of Economic Analysis ( email )

Campus de los Naranjos
46022 Valencia
Spain
+96 382 8210 (Phone)
+96 382 8249 (Fax)

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