Firm-level export and import survival over the business cycle

This paper examines how the duration of new exporters’ spells depends on business cycle conditions, using micro-level data on all spells initiated by French firms over the period 1998-2015. First, we find that exporters’ and importers’ hazard rates of leaving foreign markets are counter-cyclical. Second, new spells initiated during recessions face a lower hazard of leaving export/import markets (cohort effect), suggesting downturns have long-lasting effects on participation in foreign trade. Third, hazard rates are high at entry but fall sharply with spell age, both for cohorts ’born’ at good and bad times. Fourth, using the Full sample, approximately 2/3 (1/2) of aggregate negative age dependence in exports (imports) is related to ”true” age dependence, and 1/3 (1/2) is related to sorting. Finally, the estimation of a bivariate duration model confirms these patterns and reveals a positive association between the duration of import and export spells. Overall, our results suggest that business cycle conditions affect trade participation both in the short- and long-run, with both ’cleansing’ and ’scarring’ effects of recessions at work.