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Export decision under risk

Author

Listed:
  • José De Sousa

    (RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay)

  • Anne-Célia Disdier
  • Carl Gaigné
Abstract
We show that economic uncertainty in foreign markets affects firms' economic decisions, particularly those of the most productive firms. Using export data at both the industry and firm levels, we uncover two empirical regularities. First, demand uncertainty in foreign markets affects export entry/exit decisions (extensive margin) and export sales (intensive margin). If all destination countries exhibited the lowest volatility observed across destinations, then total French exports would rise by approximately 18% (an increase primarily driven by the extensive margin). Second, the most productive exporters are more affected by a higher industry-wide expenditure volatility than are the least productive exporters. The 25% most productive firms export, on average, 27% more in value than the 25% least productive firms in less volatile markets, while this difference decreases to 12% in the most volatile markets.

Suggested Citation

  • José De Sousa & Anne-Célia Disdier & Carl Gaigné, 2020. "Export decision under risk," Post-Print hal-04246995, HAL.
    • Handle: RePEc:hal:journl:hal-04246995
    DOI: 10.1016/j.euroecorev.2019.103342
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    4. Héricourt, Jérôme & Nedoncelle, Clément, 2018. "Multi-destination firms and the impact of exchange-rate risk on trade," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1178-1193.
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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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