Venting Out: Exports During a Domestic Slump

90 Pages Posted: 26 Dec 2018

See all articles by Miguel Almunia

Miguel Almunia

CUNEF

Pol Antras

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

David Lopez Rodriguez

Banco de España

Eduardo Morales

Princeton University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: December 2018

Abstract

We exploit plausibly exogenous geographical variation in the reduction in domestic demand caused by the Great Recession in Spain to document the existence of a robust, within-firm negative causal relationship between demand-driven changes in domestic sales and export flows. Spanish manufacturing firms whose domestic sales were reduced by more during the crisis observed a larger increase in their export flows, even after controlling for firms’ supply determinants (such as labor costs). This negative relationship between demand-driven changes in domestic sales and changes in export flows illustrates the capacity of export markets to counteract the negative impact of local demand shocks. We rationalize our findings through a standard heterogeneous-firm model of exporting expanded to allow for non-constant marginal costs of production. Using a structurally estimated version of this model, we conclude that the firm-level responses to the slump in domestic demand in Spain could well have accounted for around one-half of the spectacular increase in Spanish goods exports (the so-called ‘Spanish export miracle’) over the period 2009-13.

Suggested Citation

Almunia, Miguel and Antras, Pol and Lopez Rodriguez, David and Morales, Eduardo, Venting Out: Exports During a Domestic Slump (December 2018). NBER Working Paper No. w25372, Available at SSRN: https://ssrn.com/abstract=3306073

Miguel Almunia (Contact Author)

CUNEF ( email )

Serrano Anguita 9
Madrid, Madrid 28004
Spain

HOME PAGE: http://www.miguelalmunia.eu

Pol Antras

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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David Lopez Rodriguez

Banco de España ( email )

Alcala 48
Madrid, 28014
Spain

HOME PAGE: http://sites.google.com/site/davidlopezrodriguezphd/home

Eduardo Morales

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

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