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

44 Pages Posted: 28 May 2020

See all articles by Mónica Correa-López

Mónica Correa-López

Banco de España

Rafael Doménech

University of Valencia - Department of Economic Analysis

Date Written: June 2019

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 (SME’s), but the former tend to enjoy greater gains. This feature also manifests itself in international markets. We find evidence of an input cost channel through which service regulations affect the volume of exports of large manufacturers, while the evidence of such a channel is weaker for SME’s. Our estimates indicate that, from 1991 to 2007, large firms increased their volume of exports by an average of 20 per cent 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 nine per cent. We conclude that firm size is relevant for the connection between services reforms, intermediate input prices and export volumes.

Suggested Citation

Correa-López, Mónica and Doménech, Rafael, Service Regulations, Input Prices and Export Volumes: Evidence from a Panel of Manufacturing Firms (June 2019). The Journal of Industrial Economics, Vol. 67, Issue 2, pp. 328-371, 2019, Available at SSRN: https://ssrn.com/abstract=3609422 or http://dx.doi.org/10.1111/joie.12201

Mónica Correa-López (Contact Author)

Banco de España ( email )

Alcala 50
28014 Madrid
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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