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Exports, Investment and Firm-Level Sales Volatility

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  • Alejandro Riaño

Abstract

This paper presents a dynamic model of risk-averse producers’ decision to invest in physical capital and to export. The model features irreversible investment, no capital markets and fixed and sunk costs to export. Several features of the distribution of investment rates and export participation patterns observed in firm-level data are closely matched in a calibration exercise. Counterfactual experiments show that large adjustments in total sales associated with entry into foreign markets increase the volatility of total sales for exporting firms.

Suggested Citation

  • Alejandro Riaño, 2011. "Exports, Investment and Firm-Level Sales Volatility," CESifo Working Paper Series 3319, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3319
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    References listed on IDEAS

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    Cited by:

    1. Sourafel Girma & Sandra Lancheros & Alejandro Riaño, 2016. "Global Engagement and Returns Volatility," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(6), pages 814-833, December.

    More about this item

    Keywords

    exports; investment; uncertainty;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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