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Manufacturing firms’ export activity: Business and financial cycles overlaps!

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  • Juan Laborda
  • Vicente Salas
  • Cristina Suárez

Abstract

This paper models how the business and financial cycles interact in firms’ export activity. Specifically, we study the influence of macroeconomic variables on the decision to export and on the volume of exports, being controlled by firms’ characteristics. A distinction is made between the firms’ export activity in reaction to increases in external demand after improvements in national competitiveness, and firms’ exporting in response to a reduction in aggregate internal demand. The decision to export depends positively on the countries’ competitiveness variables, and the volume of exports also depends positively on national competitiveness and negatively on growth of internal demand. We also find a positive influence of the leverage of the economy on extensive and intensive export activity. Our results suggest that the financial cycle overlaps with the business cycle in influencing firm export activity decisions.

Suggested Citation

  • Juan Laborda & Vicente Salas & Cristina Suárez, 2020. "Manufacturing firms’ export activity: Business and financial cycles overlaps!," International Economics, CEPII research center, issue 162, pages 1-14.
    • Handle: RePEc:cii:cepiie:2020-q2-162-1
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    More about this item

    Keywords

    Exports; Industrial and manufacturing; Macroeconomics; Competitive advantage Internal demand; Credit cycle;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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