Domestic demand, capacity constraints and exporting dynamics: Empirical evidence for vulnerable euro area countries

Belke, Ansgar; Oeking, Anne; Setzer, Ralph

doi:10.1016/j.econmod.2014.10.035

Cited by 49 publications

(46 citation statements)

References 24 publications

(23 reference statements)

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“…Indeed, Salomon and Shaver (2005) argue that export sales and domestic sales should be determined simultaneously: their relationship is interdependent rather than independent. In a similar vein, Belke, Oeking, and Setzer (2015) argue that under certain conditions, firms consider export activity as a substitute for serving domestic demand. One potential limitation of the previous literature is that the 'complementarity' versus 'substitutability' property of domestic demand and export activity has typically been analysed in a linear framework.…”

Section: External Market Conditionsmentioning

confidence: 99%

“…Based on firm-level data from five Euro area countries, Belke et al (2015) find that domestic demand developments are relevant for the short-run dynamics of exports especially during the more extreme stages of the business cycle. A strong substitute relationship between domestic and foreign sales can most clearly be found in Spain, Portugal and Italy, providing evidence of the importance of sunk costs and suggesting that history matters in international trade.…”

Section: External Market Conditionsmentioning

confidence: 99%

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Explaining intermittent exporting: Exit and conditional re-entry in export markets

Bernini

Love

2016

J Int Bus Stud

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Intermittent exporting is something of a puzzle. In theory, exporting represents a major commitment, and is often the starting point for further internationalization. However, intermittent exporters exit and subsequently re-enter exporting, sometimes frequently. We develop a conceptual model to explain how firm characteristics and market conditions interact to affect the decision to exit and re-enter exporting, and model this process using an extensive dataset of French manufacturing firms from 1997 to 2007. As anticipated, smaller and less productive firms are more likely to exit exporting, and react more strongly to changes in both domestic and foreign markets than larger firms. Exit and re-entry are closely linked. Firms with a low exit probability also have a high likelihood of re-entry, and vice versa. However, the way in which firms react to market conditions at the time of exit matters greatly in determining the likelihood of re-entry: thus re-entry depends crucially on the strategic rationale for exit. Our analysis helps explain the opportunistic and intermittent exporting of (mainly) small firms, the demand conditions under which intermittent exporting is most likely to occur, and the firm attributes most likely to give rise to such behavior.

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Section: External Market Conditionsmentioning

confidence: 99%

Section: External Market Conditionsmentioning

confidence: 99%

Explaining intermittent exporting: Exit and conditional re-entry in export markets

Bernini

Love

2016

J Int Bus Stud

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“…I account for the fiscal deficit channel by including measures of public debt (as a % of GDP) and the government primary balance (as a % of GDP). In addition to these variables, I also include a measure of domestic demand growth (%), which Belke et al (2015) show is important in explaining exporting dynamics and consequently current account balances in the countries that ran persistent current account deficits in the post-EMU period (France, Greece, Italy, Portugal and Spain).…”

Section: Datamentioning

confidence: 99%

Estimating the effect of the EMU on current account balances: A synthetic control approach

Hope

2016

European Journal of Political Economy

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The European sovereign debt crisis wrought major political and economic damage on the European Monetary Union (EMU). This led to a reassessment of the pre-crisis period of economic growth and stability in the EMU, shifting attention to the macroeconomic imbalances that emerged between member states, especially those in current account balances. This paper uses macroeconomic data on OECD economies and a new statistical approach for causal inference in observational studies-the synthetic control method-to estimate the effect of the EMU on the current account balances of individual member states. This 'counterfactuals' approach provides strong evidence that the introduction of the EMU was responsible for the divergence in current account balances among member states in the run-up to the euro crisis. The results suggest that the EMU effect operated through multiple channels and that fundamental changes to the institutional framework of the EMU may be required to safeguard the currency union against a reemergence of dangerous external imbalances in the future.

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“…If the switching cost is too high, then the investors would not transfer these produce materials to the domestic consume produce, this also develops the export crowd out the domestic demand [1]. Xiaolei Cao did the research about the relationship between China domestic demand and external demand in the perspective of international financial crisis, she found that domestic demand and external demand are mutual inhibition and substitution, especially in China's export-oriented policy, distorting the resource allocation, prompting more resources to export markets.…”

Section: The Inner Mechanism Of How Export Affects Domestic Consume Amentioning

confidence: 99%

“…When the economy is boom, then the domestic capital can be fully used, there is no need to shift the capital to the export industry [1]. Yang did the research about price elasticity and income elasticity of China's every industries, she found that all kinds of imported products have low substitution, while the manufactured goods have high world income elasticity [3].…”

Section: The Inner Mechanism Of How Export Affects Domestic Consume Amentioning

confidence: 99%

Crowding-Out Effect of Exports on Domestic Consumption: An Analysis Based on Panel Data of Several Industries in China

Li¹

2017

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This paper tries to use the data of 1998-2014 about nine departments (department of food, beverage and tobacco, department of fabric and clothing, department of car and motorcar and relative spare and accessory parts, department of medicine and the medical machine, department of culture, sports and relative equipment, minerals, building materials and chemical products division, house appliances division, computer auxiliary equipment division and else departments) to make the regression by Eviews 8.0. We find that department of food, beverage and tobacco and department of car and motorcar and relative spare and accessory parts, department of medicine and the medical machine, department of culture, sports and relative equipment do have crowding-out effect of exports on domestic consumption. Finally, in response to the policy of expanding the demand by analyzing the empirical result, we provide some recommendations from the perspective of export trade.

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Domestic demand, capacity constraints and exporting dynamics: Empirical evidence for vulnerable euro area countries

Cited by 49 publications

References 24 publications

Explaining intermittent exporting: Exit and conditional re-entry in export markets

Explaining intermittent exporting: Exit and conditional re-entry in export markets

Estimating the effect of the EMU on current account balances: A synthetic control approach

Crowding-Out Effect of Exports on Domestic Consumption: An Analysis Based on Panel Data of Several Industries in China

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