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Export supply, capacity and relative prices

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  • Faini, Riccardo

Abstract

In the neoclassical approach to specifying an export supply equation, relative prices and capacity are assumed to play a crucial role in domestic firms'decisions to supply exports. In the Keynesian approach, the willingness of domestic firms to supply foreign markets is considered to be largely a function of domestic demand pressure. Keynesian analyses do not allow for the impact of relative prices. This paper blends the two approaches in a model,in which a firm is assumed to choose, first, the level of productive capacity and, then, one period later, to determine production and allocation between foreign and domestic markets on the basis of realized prices, demand conditions, and installed capacity. The conclusion: both prices and capacity are significant determinants of export supply.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 45 (1994)
Issue (Month): 1 (October)
Pages: 81-100

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Handle: RePEc:eee:deveco:v:45:y:1994:i:1:p:81-100

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References

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  1. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February.
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  3. Marian E. Bond, 1985. "Export Demand and Supply for Groups of Non-Oil Developing Countries (La demande et l'offre d'exportations dans différents groupes de pays en développement non pétroliers) (Demanda y oferta de," IMF Staff Papers, Palgrave Macmillan, vol. 32(1), pages 56-77, March.
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Cited by:
  1. Ansgar Belke & Anne Oeking & Ralph Setzer, 2013. "Exports and Capacity Constraints – A Smooth Transition Regression Model for Six Euro Area Countries," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0449, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Soares Esteves, Paulo & Rua, António, 2013. "Is there a role for domestic demand pressure on export performance?," Working Paper Series, European Central Bank 1594, European Central Bank.
  3. Felicitas Nowak-Lehmann D. & Inmaculada Martínez- Zarzoso, 2003. "The interplay of export supply and the real exchange rate. Evidence for Mercosur exports to the EU," International Trade, EconWPA 0309020, EconWPA.
  4. Paulo Soares Esteves & António Rua, 2013. "Is there a role for domestic demand pressure on export performance?," Working Papers, Banco de Portugal, Economics and Research Department w201303, Banco de Portugal, Economics and Research Department.
  5. Christian Helmers & Natalia Trofimenko, 2010. "Export Subsidies in a Heterogeneous Firms Framework: Evidence from Colombia," Economics Series Working Papers CSAE WPS/2010-26, University of Oxford, Department of Economics.
  6. Newman, John L. & Lavy, Victor & Salomon, Raoul & de Vreyer, Philippe, 1990. "Firms'responses to relative price changes in Cote d'Ivoire : the implications for export subsidies and devaluations," Policy Research Working Paper Series 550, The World Bank.
  7. Hassan Molana & Amir Mozayani, 2004. "Is Monetary Discipline a Precondition for the Effectiveness of Iran's Export Promotion Policies?," Dundee Discussion Papers in Economics, Economic Studies, University of Dundee 165, Economic Studies, University of Dundee.
  8. Devarajan, Shantayanan & Go, Delfin S. & Hongyi Li, 1999. "Quantifying the fiscal effects of trade reform," Policy Research Working Paper Series 2162, The World Bank.
  9. Newman, John L. & Lavy, Victor & de Vreyer, Philippe, 1995. "Export and output supply functions with endogenous domestic prices," Journal of International Economics, Elsevier, Elsevier, vol. 38(1-2), pages 119-141, February.
  10. Bakoup, Ferdinand & Tarr, David, 1998. "How integration into the Central African Economic and Monetary Community affects Cameroon's economy: general equilibrium estimates," Policy Research Working Paper Series 1872, The World Bank.
  11. Jai S. Mah, 2003. "The Export Insurance System and Export Supply of Britain," Working papers, University of Connecticut, Department of Economics 2003-44, University of Connecticut, Department of Economics.
  12. Rudy Rahmaddi & Masaru Ichihashi, 2011. "How Do Foreign and Domestic Demand Affect Exports Performance? An Econometric Investigation of Indonesia's Exports," IDEC DP2 Series 1-4, Hiroshima University, Graduate School for International Development and Cooperation (IDEC), revised Jan 2012.
  13. Mah, Jai S., 2006. "The effect of export insurance subsidy on export supply: The experience of Japan," Journal of Asian Economics, Elsevier, vol. 17(4), pages 646-652, October.
  14. Nogues, Julio, 1989. "Latin America's experience with export subsidies," Policy Research Working Paper Series 182, The World Bank.
  15. World Bank, 2014. "Trading Up to High Income : Turkey Country Economic Memorandum," World Bank Other Operational Studies 19320, The World Bank.
  16. Belke, Ansgar & Oeking, Anne & Setzer, Ralph, 2014. "Exports and Capacity Constraints: A smooth transition regression model for six euro-area countries," CEPS Papers, Centre for European Policy Studies 9228, Centre for European Policy Studies.
  17. Ansgar Belke & Anne Oeking & Ralph Setzer, 2014. "Domestic demand pressure and export dynamics – An empirical threshold model analysis for six euro area countries," EcoMod2014 6780, EcoMod.
  18. Julio Nogués, 1990. "The experience of Latin America with export subsidies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 126(1), pages 97-115, March.
  19. Mah, Jai S., 2007. "The effect of duty drawback on export promotion: The case of Korea," Journal of Asian Economics, Elsevier, vol. 18(6), pages 967-973, December.
  20. Yang, Lucun, 2011. "An Empirical Analysis of Current Account Determinants in Emerging Asian Economies," Cardiff Economics Working Papers E2011/10, Cardiff University, Cardiff Business School, Economics Section.

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