Surviving the Perfect Storm: Exports, Fiscal Austerity, and Firm Heterogeneity

34 Pages Posted: 27 Dec 2019

See all articles by Manuel Adelino

Manuel Adelino

Duke University; Duke Innovation & Entrepreneurship Initiative; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Paulo Fagandini

Nova SBE

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Francisco Queiro

Nova School of Business and Economics

Date Written: November 18, 2019

Abstract

We show that shocks to domestic demand can have important effects on exports. Austerity measures implemented in southern European countries as a result of the 2010-2011 sovereign debt crisis were a large and unanticipated shock to government spending. We find that firms with higher ex-ante government exposure significantly increase their exports following such a shock. Older and larger firms are better able to substitute domestic sales with entry into export markets than younger and smaller firms. Higher-quality firms (i.e., firms with higher paid workers, higher productivity and more educated managers) are also more likely to start exporting. Unlike previous research on non-tradable industries, our results suggest that more mature firms drive the response of tradable industries to demand shocks.

Keywords: Fiscal austerity, Exports, Investment opportunities, Financial crises

JEL Classification: F10, G01, G30, H57, H60

Suggested Citation

Adelino, Manuel and Fagandini, Paulo and Ferreira, Miguel Almeida and Queiro, Francisco, Surviving the Perfect Storm: Exports, Fiscal Austerity, and Firm Heterogeneity (November 18, 2019). Available at SSRN: https://ssrn.com/abstract=3499530 or http://dx.doi.org/10.2139/ssrn.3499530

Manuel Adelino

Duke University ( email )

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Paulo Fagandini

Nova SBE ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

HOME PAGE: http://https://sites.google.com/site/paulofagandini/

Miguel Almeida Ferreira (Contact Author)

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Francisco Queiro

Nova School of Business and Economics ( email )

Lisbon, 1099-085
Portugal

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