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Residual exports and domestic demand: an empirical analysis

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  • Muñoz Sepúlveda, Jesús A.

Abstract

This paper analyzes and quantifies the impact of exporter status on domestic sales. It is widely assumed that exporters sell in domestic markets more volume than non-exporters. In addition, non-persistent exporting firms have on average higher volumes of domestic sales in those years in which they are involved in export activities. This paper contributes to this literature by using data from a representative sample of Spanish manufacturing firms (Encuesta Sobre Estrategias Empresariales) over the period 1990-2011. By applying a difference-in-difference approach, results confirm that exporters have on average larger domestic sales (volumes and growth rates) than non-exporters. Additionally, a fixed and random effects model is also applied to measure the impact of exporter status on domestic sales, considering only exporting firms. Results suggest that exporter status increases domestic sales volumes, although it significantly reduces growth. We will refer to this deceleration as residual exports. The amount of the effect varies depending on firms’ persistence in export markets.

Suggested Citation

  • Muñoz Sepúlveda, Jesús A., 2014. "Residual exports and domestic demand: an empirical analysis," MPRA Paper 58328, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:58328
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    File URL: https://mpra.ub.uni-muenchen.de/58328/1/MPRA_paper_58328.pdf
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    References listed on IDEAS

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    1. Lourdes Moreno, 1997. "The determinants of Spanish industrial exports to the European Union," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 723-732.
    2. Thierry Mayer & Gianmarco I.P. Ottaviano, 2008. "The Happy Few: New Facts on the Internationalization of European Firms Based on Firm-level Evidence," L'industria, Società editrice il Mulino, issue 2, pages 221-244.
    3. JaeBin Ahn & Alexander McQuoid, 2013. "Capacity Constrained Exporters: Micro Evidence and Macro Implications," Working Papers 1301, Florida International University, Department of Economics.
    4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    5. Blonigen, Bruce A. & Wilson, Wesley W., 2010. "Foreign subsidization and excess capacity," Journal of International Economics, Elsevier, vol. 80(2), pages 200-211, March.
    6. Ana Buisan & Esther Gordo, 1994. "Funciones de importación y exportación de la economía española," Investigaciones Economicas, Fundación SEPI, vol. 18(1), pages 165-192, January.
    7. Lee, Seung-Hyun & Beamish, Paul W. & Lee, Ho-Uk & Park, Jong-Hun, 2009. "Strategic choice during economic crisis: Domestic market position, organizational capabilities and export flexibility," Journal of World Business, Elsevier, vol. 44(1), pages 1-15, January.
    8. Blum, Bernardo S. & Claro, Sebastian & Horstmann, Ignatius J., 2013. "Occasional and perennial exporters," Journal of International Economics, Elsevier, vol. 90(1), pages 65-74.
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    More about this item

    Keywords

    Residual exports; domestic sales; difference-in-difference; fixed and random effects;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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