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Exporters and Shocks

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Listed:
  • Doireann Fitzgerald
  • Stephanie Haller

Abstract

We use micro data for Ireland to estimate how export participation and the export revenue of incumbent exporters respond to tariffs and real exchange rates. Both participation and revenue, but especially revenue, are more responsive to tariffs than to real exchange rates. Our estimates translate into an elasticity of aggregate exports with respect to tariffs of between -3.8 and -5.4, and with respect to real exchange rates of between 0.45 and 0.6, consistent with estimates in the literature based on aggregate data. We argue that forward-looking investment in customer base combined with the fact that tariffs are much more predictable than real exchange rates can explain why export revenue responds so much more to tariffs.

Suggested Citation

  • Doireann Fitzgerald & Stephanie Haller, 2017. "Exporters and Shocks," Staff Report 549, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:549
    DOI: 10.21034/sr.549
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    References listed on IDEAS

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    More about this item

    Keywords

    Tariffs; Real exchange rates; International elasticity puzzle;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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