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Exporters and Shocks

Staff Report 549 | Published May 18, 2017

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Doireann Fitzgerald Senior Research Economist
Exporters and Shocks


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.

Published in: _Journal of International Economics_ (Vol. 113, July 2018, pp. 154-171)