erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Micro Foundations of Export Dynamics

James Tybout (Pennsylvania State University, USA)
Sanghamitra Das (Indian Statistical Institute Delhi Centre, India)
Mark Roberts (Pennsylvania State University and the NBER, USA)

Abstract

The responses of industrial exports to regime changes are notoriously hard to predict. In this paper we investigate whether the predictability problem traces partly to micro phenomena that are undetectable with aggregated data. We begin by developing a dynamic model of exporting behavior that allows for uncertainty, heterogenous firms, and one-shot entry costs for firms breaking into foreign markets. Then we fit the model to plant-level panel data on Colombian chemical producers. Finally, using the results, we simulate aggregate export trajectories under alternative exchange rate regimes to quantify the effects of entry costs, regime credibility, and heterogeneity. Each proves to matter, but a substantial portion of the randomness in aggregate exports remains unexplained.

Economic Research Center
Middle East Technical University
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