Export Destinations and Input Prices
Paulo Bastos, Joana Silva, Eric Verhoogen
American Economic Review · 2018 · Volume 108 · Issue 2
Abstract
This paper examines the relationship between the destination of exports and the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. Both ordinary least squares regressions and an instrumental-variable strategy using exchange-rate movements (interacted with indicators for initial exports) as a source of variation in destinations indicate that exporting to richer countries leads firms to pay higher prices for inputs, other things equal. The results are supportive of what we call the income-based quality-choice channel: selling to richer destinations leads firms to raise the average quality of goods they produce and to purchase higher-quality inputs.
Keywords
Firm Behavior: Empirical Analysis, Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity, Empirical Studies of Trade, Foreign Exchange, Information and Product Quality, Standardization and Compatibility
Enable JavaScript for citation tools and additional paper interactions.