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Export dynamics and sales at home

Author

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  • Berman, Nicolas
  • Berthou, Antoine
  • Héricourt, Jérôme
Abstract
How do firms' sales interact across markets? Are foreign and domestic sales complements or substitutes? Using a French firm-level database combining balance-sheet and product-destination-specific export information over the period 1995–2001, we study how demand conditions in foreign markets affect domestic sales through variations in exports. We identify a number of exogenous shocks affecting the firms' demand on foreign markets, including product-destination specific imports or tariff changes, and large foreign shocks such as financial crises or civil wars. Our results show that exogenous variations in firm-level exports positively impact domestic sales, even after controlling for domestic demand conditions. A 10% exogenous increase in foreign sales generates a 1 to 3% increase in domestic sales in the short-run. This result is robust to various estimation techniques, instruments, controls, and sub-samples. It is also supported by the natural experiment of the Asian crisis in the late 1990's.

Suggested Citation

  • Berman, Nicolas & Berthou, Antoine & Héricourt, Jérôme, 2015. "Export dynamics and sales at home," Journal of International Economics, Elsevier, vol. 96(2), pages 298-310.
    • Handle: RePEc:eee:inecon:v:96:y:2015:i:2:p:298-310
    DOI: 10.1016/j.jinteco.2015.04.001
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    Keywords

    Export; Domestic sales; Demand shocks; Markets;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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