Export dynamics and sales at home

Using a French firm-level database that combines balance-sheet and product-destination-specic export information over the period 1995-2001, we study the interconnections between exports and domestic sales. We identify exogenous shocks that affect the firms' demand on foreign markets to instrument yearly variations in exports. We use alternatively as instruments product-destination specic imports or taris changes, and large foreign shocks such as financial crises or civil wars. Our results show that exogenous variations in foreign sales are positively associated with domestic sales, even after controlling for changes in domestic demand. A 10% exogenous increase in exports generates a 1 to 3% increase in domestic sales in the short-term. This result is robust to various estimation techniques, instruments, controls, and sub-samples. We provide empirical evidence suggesting that this positive effect of exogenous changes in exports on domestic sales is related to a relaxation of short-run liquidity constraints.

Publication infos:
Frankfurt am Main, European Central Bank, 2014
Publication year:
Number of pages:
49 p.
European Central Bank working paper; no. 1720

 Record created 2014-09-10, last modified 2019-08-05

Download fulltext

Rate this document:

Rate this document:
(Not yet reviewed)