Working Paper: NBER ID: w19968
Authors: Doireann Fitzgerald; Stefanie Haller
Abstract: We use micro data for Ireland to estimate how export participation and the export revenue of incumbent exporters respond to tariffs and real exchange rates. Both participation and revenue, but especially revenue, are more responsive to tariffs than to real exchange rates. Our estimates translate into an elasticity of aggregate exports with respect to tariffs of between -3.8 and -5.4, and with respect to real exchange rates of between 0.45 and 0.6, consistent with estimates in the literature based on aggregate data. We argue that forward-looking investment in customer base combined with the fact that tariffs are much more predictable than real exchange rates can explain why export revenue responds so much more to tariffs.
Keywords: export participation; export revenue; tariffs; real exchange rates; international trade
JEL Codes: F14; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decrease in tariffs (F19) | Increase in export entry rates (F10) |
| Decrease in tariffs (F19) | Increase in export revenue (F10) |
| Export revenue of incumbent exporters is more elastic with respect to tariffs than to real exchange rates (F14) | Decrease in tariffs leads to a greater increase in export revenue than changes in real exchange rates (F14) |
| Elasticity of aggregate exports with respect to tariffs (F14) | Elasticity of aggregate exports with respect to real exchange rates (F14) |