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Export supply, capacity, and relative prices

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  • Faini, Ricardo

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

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 123.

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Date of creation: 30 Nov 1988
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Handle: RePEc:wbk:wbrwps:123

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Keywords: Geographical Information Systems; Economic Theory&Research; Environmental Economics&Policies; Access to Markets; Markets and Market Access;

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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, vol. 25(1), pages 221-47, February.
  2. 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.
  3. Kiviet, Jan F., 1985. "Model selection test procedures in a single linear equation of a dynamic simultaneous system and their defects in small samples," Journal of Econometrics, Elsevier, vol. 28(3), pages 327-362, June.
  4. W.E. Diewert, 1986. "Export Supply and Import Demand Functions: A Production Theory Approach," NBER Working Papers 2011, National Bureau of Economic Research, Inc.
  5. Haynes, Stephen E & Stone, Joe A, 1983. "Specification of Supply Behavior in International Trade," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 626-32, November.
  6. Goldstein, Morris & Khan, Mohsin S, 1978. "The Supply and Demand for Exports: A Simultaneous Approach," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 275-86, May.
  7. Ulrich R. Kohli, 1978. "A Gross National Product Function and the Derived Demand for Imports and Supply of Exports," Canadian Journal of Economics, Canadian Economics Association, vol. 11(2), pages 167-82, May.
  8. Dunlevy, James A, 1980. "A Test of the Capacity Pressure Hypothesis within a Simultaneous Equations Model of Export Performance," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 131-35, February.
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Citations

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Cited by:
  1. Newman, John L. & Lavy, Victor & de Vreyer, Philippe, 1995. "Export and output supply functions with endogenous domestic prices," Journal of International Economics, Elsevier, vol. 38(1-2), pages 119-141, February.
  2. 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 0309020, EconWPA.
  3. Paulo Soares Esteves & António Rua, 2013. "Is there a role for domestic demand pressure on export performance?," Working Papers w201303, Banco de Portugal, Economics and Research Department.
  4. 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.
  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. Hassan Molana & Amir Mozayani, 2004. "Is Monetary Discipline a Precondition for the Effectiveness of Iran's Export Promotion Policies?," Dundee Discussion Papers in Economics 165, Economic Studies, University of Dundee.
  7. 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.
  8. 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.
  9. Devarajan, Shantayanan & Go, Delfin S. & Hongyi Li, 1999. "Quantifying the fiscal effects of trade reform," Policy Research Working Paper Series 2162, The World Bank.
  10. 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.
  11. 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.
  12. 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.
  13. Jai S. Mah, 2003. "The Export Insurance System and Export Supply of Britain," Working papers 2003-44, University of Connecticut, Department of Economics.
  14. 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.
  15. Soares Esteves, Paulo & Rua, António, 2013. "Is there a role for domestic demand pressure on export performance?," Working Paper Series 1594, European Central Bank.
  16. 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.
  17. Julio Nogués, 1990. "The experience of Latin America with export subsidies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 126(1), pages 97-115, March.
  18. Nogues, Julio, 1989. "Latin America's experience with export subsidies," Policy Research Working Paper Series 182, The World Bank.

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