Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/60740

TitleDoes domestic demand matter for firms' exports?
Author(s)Esteves, Paulo Soares
Portela, Miguel
Rua, António
KeywordsInternational trade
Firms
Exports
Domestic demand
Foreign demand
Panel data
Issue date2018
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
JournalNIPE Working Paper
Abstract(s)The existence of a link between exports and domestic demand challenges the standard theoretical assumption in international trade models and carries out important policy implications. Being a small open economy and one of the hardest hit economies during the latest economic and financial crisis, Portugal is a natural case study for assessing the role of this channel, in particular given the large export market share gains that mitigated the negative effects on economic activity. A key difference of our empirical approach vis-`a-vis previous literature is that the estimated relationship between exports and domestic sales results directly from a monopolistic model of a firm selling to both domestic and external markets. Drawing on an appropriate estimation strategy, it is found a noteworthy negative relationship between domestic demand and firms’ exports covering the manufacturing sector over the period 2009–2016. This result holds for almost all industries although with a heterogeneous magnitude. Aditionally, there is also evidence that this effect is stronger for larger firms.
TypeWorking paper
URIhttp://hdl.handle.net/1822/60740
Publisher versionhttps://www.eeg.uminho.pt/pt/investigar/nipe/Paginas/publicacoes.aspx
Peer-Reviewedno
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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