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Exporters and shocks

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  • Fitzgerald, Doireann
  • Haller, Stefanie

Abstract

We use micro data for Ireland to estimate the responses of export entry, export exit, and the export revenue of incumbent exporters to changes in tariffs and real exchange rates. Entry and revenue are much more responsive to tariffs than they are to real exchange rates. Our estimates translate into an elasticity of aggregate exports with respect to tariff changes of between −1.5 and −3.5 on impact, and between −2 and −5 in the long run. Comparable elasticities for real exchange rate changes are around 0.5 on impact, and between 0.6 and 0.8 in the long run. These estimates are consistent with estimates in the literature based on aggregate data. They provide further evidence that workhorse models of international trade and business cycles which impose identical responses must be modified in order to answer policy questions touching on both international trade and the current account.

Suggested Citation

  • Fitzgerald, Doireann & Haller, Stefanie, 2018. "Exporters and shocks," Journal of International Economics, Elsevier, vol. 113(C), pages 154-171.
  • Handle: RePEc:eee:inecon:v:113:y:2018:i:c:p:154-171
    DOI: 10.1016/j.jinteco.2018.04.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Clément Malgouyres & Thierry Mayer, 2018. "Exports and labor costs: evidence from a French policy," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(3), pages 429-454, August.
    2. repec:eee:inecon:v:118:y:2019:i:c:p:217-232 is not listed on IDEAS
    3. Fontagné, Lionel & Martin, Philippe & Orefice, Gianluca, 2018. "The international elasticity puzzle is worse than you think," Journal of International Economics, Elsevier, vol. 115(C), pages 115-129.
    4. Fontagné, Lionel & Martin, Philippe & Orefice, Gianluca, 2018. "The international elasticity puzzle is worse than you think," Journal of International Economics, Elsevier, vol. 115(C), pages 115-129.
    5. Fernandes, Ana & Winters, L. Alan, 2018. "The effect of exchange rate shocks on firm-level exports: evidence from the Brexit vote," CEPR Discussion Papers 13253, C.E.P.R. Discussion Papers.
    6. Meredith A. Crowley & Exton, O. & Han, L., 2018. "Renegotiation of Trade Agreements and Firm Exporting Decisions: Evidence from the Impact of Brexit on UK Exports," Cambridge Working Papers in Economics 1839, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    Exporters; Tariffs; Real Exchange Rates; International Elasticity Puzzle;

    JEL classification:

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

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