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Hysteresis in Japanese Export Market: A Dynamic Random-Effect Probit Approach to Panel Data of Japanese Machinery-manufacturing Firms

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  • OGAWA Kazuo
  • TOKUTSU Ichiro

Abstract

We estimate the hysteresis effect in export participation decision based on rich panel data of Japanese machinery-manufacturing firms from 1994 to 2015. We find that the "observed" hysteresis effect, difference between the probability of export for the firms that exported in the previous year and the probability of export for the firms that did not export in the previous year, is quite large (0.904 for machinery-manufacturing sector as a whole) Using the estimates of dynamic random-effects probit model, we calculate the degree of "genuine" hysteresis Then we find that the "observed" hysteresis in part reflects spurious effects that are caused by both observable (firm size) and unobservable firm characteristics that tend to persist over time. The genuine hysteresis effect, free from spurious effects, is much smaller than the observed one, but the magnitude of genuine hysteresis still exceeds 0.5.

Suggested Citation

  • OGAWA Kazuo & TOKUTSU Ichiro, 2015. "Hysteresis in Japanese Export Market: A Dynamic Random-Effect Probit Approach to Panel Data of Japanese Machinery-manufacturing Firms," Discussion papers 15031, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:15031
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    File URL: https://www.rieti.go.jp/jp/publications/dp/15e031.pdf
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    References listed on IDEAS

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    1. Iacovone, Leonardo & Ferro, Esteban & Pereira-López, Mariana & Zavacka, Veronika, 2019. "Banking crises and exports: Lessons from the past," Journal of Development Economics, Elsevier, vol. 138(C), pages 192-204.
    2. Forslid, Rikard & Okubo, Toshihiro, 2011. "Are capital intensive firms the biggest exporters?," CEPR Discussion Papers 8345, C.E.P.R. Discussion Papers.
    3. Fukunari Kimura & Kozo Kiyota, 2006. "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 695-719, December.
    4. KWON Hyeog Ug & Kim YoungGak & FUKAO Kyoji, 2008. "Why Has Japan's TFP Growth Recovered?: An empirical analysis based on the basic survey of Japanese business structure and activities (Japanese)," Discussion Papers (Japanese) 08050, Research Institute of Economy, Trade and Industry (RIETI).
    5. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
    6. YASHIRO Naomitsu & HIRANO Daisuke, 2010. "Evaluating Japanese Exporters' Performance and Investment Behavior during the 2002-2007 Export Boom (Japanese)," Policy Discussion Papers (Japanese) 10005, Research Institute of Economy, Trade and Industry (RIETI).
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    Cited by:

    1. Fukao, Kyoji & Ikeuchi, Kenta & Kim, YoungGak & Kwon, Hyeog Ug, 2016. "Why was Japan left behind in the ICT revolution?," Telecommunications Policy, Elsevier, vol. 40(5), pages 432-449.

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