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Sunk Costs Hysteresis In Spanish Manufacturing Exports

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  • Juan A. Máñez

    ()
    (Universitat de València)

  • Juan A. Sanchis Llopis

    (Universitat de València)

  • María E. Rochina

    (Universitat de València)

Abstract

This paper tests the sunk costs explanation for hysteresis in exports using a sample of Spanish manufacturing firms for the period 1990-2000. The data are drawn from the Spanish Encuesta sobre Estrategias Empresariales. To obtain consistent estimates for sunk costs, we control for all other sources of persistence and use a dynamic random effects multivariate probit model that is estimated through pseudo simulated maximum-likelihood techniques. Our results support the sunk costs explanation for hysteresis. Furthermore, regional spillovers and some firm characteristics such as size, productivity or vertical and horizontal product differentiation are found to have a significant influence on the probability of exporting. El objetivo de este artículo es analizar el papel de los costes irrecuperables como factorexplicativo de la histéresis de las exportaciones. Para ello se hace uso de una muestra deempresas industriales españolas para el período 1999-2000, que proviene de la Encuestasobre Estrategias Empresariales. Con el objetivo de obtener estimaciones consistentespara los costes irrecuperables, controlamos por todas las posibles fuentes alternativas depersistencia y estimamos nuestro modelo usando técnicas de pseudo máximaverosimilitud simulada. Nuestros resultados confirman a los costes irrecuperables comocausante de la histéresis de las exportaciones. Adicionalmente, encontramos que lasexternalidades regionales y algunas características empresariales tales como tamaño,productividad o diferenciación horizontal y vertical tienen un impacto significativosobre la probabilidad de exportar.

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File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-2004-17.pdf
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2004-17.

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Length: 30 pages
Date of creation: Sep 2004
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2004-17

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Keywords: Histéresis de las exportaciones; costes irrecuperables; modelos dinámicos de elección discrecional hysteresis in trade; sunk costs; dynamic discrete choice models;

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  1. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "learning-by-exporting" important? Micro-dynamic evidence from Colombia, Mexico and Morocco," Finance and Economics Discussion Series 96-30, Board of Governors of the Federal Reserve System (U.S.).
  2. Pakes, Ariel & Ericson, Richard, 1998. "Empirical Implications of Alternative Models of Firm Dynamics," Journal of Economic Theory, Elsevier, vol. 79(1), pages 1-45, March.
  3. Andrew B. Bernard & J. Bradford Jensen, 2001. "Why Some Firms Export," NBER Working Papers 8349, National Bureau of Economic Research, Inc.
  4. Dixit, A., 1988. "Entry And Exit Decisions Under Uncertainty," Papers 91, Princeton, Department of Economics - Financial Research Center.
  5. White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January.
  6. Baldwin, John R. & Rafiquzzaman, Mohammed, 1995. "Selection versus evolutionary adaptation: Learning and post-entry performance," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 501-522, December.
  7. Campa, Jose Manuel, 2004. "Exchange rates and trade: How important is hysteresis in trade?," European Economic Review, Elsevier, vol. 48(3), pages 527-548, June.
  8. Vassilis A. Hajivassiliou and Paul A. Ruud., 1993. "Classical Estimation Methods for LDV Models Using Simulation," Economics Working Papers 93-219, University of California at Berkeley.
  9. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
  10. Richard Baldwin, 1988. "Hysteresis In Import Prices: The Beachhead Effect," NBER Working Papers 2545, National Bureau of Economic Research, Inc.
  11. Richard Baldwin & Paul R. Krugman, 1986. "Persistent Trade Effects of Large Exchage Rate Shocks," NBER Working Papers 2017, National Bureau of Economic Research, Inc.
  12. Andrew Bernard & Joachim Wagner, 2001. "Export entry and exit by German firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(1), pages 105-123, March.
  13. Lorenzo Cappellari & Stephen P. Jenkins, 2003. "Multivariate probit regression using simulated maximum likelihood," United Kingdom Stata Users' Group Meetings 2003 10, Stata Users Group.
  14. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August.
  15. Richard Baldwin, 1989. "Sunk-Cost Hysteresis," NBER Working Papers 2911, National Bureau of Economic Research, Inc.
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Cited by:
  1. The International Study Group on Exports and Productivity, . "Exports and Productivity – Comparable Evidence for 14 Countries," Discussion Papers 07/41, University of Nottingham, GEP.
  2. Aïda Caldera Sanchez, 2009. "Innovation and Exporting: Edvidence from Spanish Manufacturing Firms," Working Papers ECARES 2009_014, ULB -- Universite Libre de Bruxelles.
  3. Itai Agur, 2006. "Firm Heterogeneity and the Two Sources of Gains from Trade," Economics Working Papers ECO2006/38, European University Institute.
  4. Gianmarco Ottaviano & Christian Volpe Martincus, 2011. "SMEs in Argentina: who are the exporters?," Small Business Economics, Springer, vol. 37(3), pages 341-361, October.
  5. Blanes-Cristóbal, José Vicente & Dovis, Marion & Milgram-Baleix, Juliette & Moro-Egido, Ana I., 2008. "Do sunk exporting costs differ among markets? Evidence from Spanish manufacturing firms," Economics Letters, Elsevier, vol. 101(2), pages 110-112, November.
  6. Gullstrand, Joakim, 2011. "Firm and destination-specific export costs: The case of the Swedish food sector," Food Policy, Elsevier, vol. 36(2), pages 204-213, April.
  7. Belke, Ansgar & Oeking, Anne & Setzer, Ralph, 2014. "Exports and Capacity Constraints: A smooth transition regression model for six euro-area countries," CEPS Papers 9228, Centre for European Policy Studies.
  8. Ansgar Belke & Anne Oeking & Ralph Setzer, 2013. "Exports and Capacity Constraints – A Smooth Transition Regression Model for Six Euro Area Countries," Ruhr Economic Papers 0449, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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