The Relationship Between United Kingdom Export Performance in Manufactures and the Internal Pressure of Demand

Ball, Ray; Eaton, J.; Steuer, Max

doi:10.2307/2229518

Cited by 70 publications

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“…However, regarding the domestic demand variable, it appears that only the negative changes in domestic demand present a statistical significant negative effect on exports dynamics, regardless of the price competitiveness measure. 5 During times of crisis, an insufficient domestic demand relative to existing productive capacity would translate into increased efforts to export and willingness to pay the sunk costs associated to entering foreign markets. Having paid this sunk cost can explain why exports are not negatively affected by a rebound in domestic demand.…”

Section: Resultsmentioning

confidence: 99%

“…This paper investigates the relationship between domestic demand and exports from a macroeconomic perspective, building on the seminal paper of Ball et al (1966) for the case of UK. In particular, the global financial crisis and its knock-on effects in Europe have recently rekindled the interest in the effects of domestic demand on exports at the macroeconomic level.…”

Section: Introductionmentioning

confidence: 99%

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Exports and domestic demand pressure: a dynamic panel data model for the euro area countries

et al. 2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, and of other organisations associated with the Network. Terms of use: Documents in AcknowledgementsThe authors would like to thank the participants in the Competitiveness Research Network meeting held at the European Central Bank in July 2014, where a preliminary version of the paper was presented, and an anonymous referee. Elena BobeicaEuropean Central Bank; e-mail: elena.bobeica@ecb.int Paulo Soares EstevesBanco de Portugal; e-mail: pmesteves@bportugal.pt António RuaBanco de Portugal, Universidade Nova de Lisboa; e-mail: antonio.rua@bportugal.pt Karsten StaehrTallinn University of Technology, Eesti Pank; e-mail: karsten.staehr@eestipank.ee Abstract The paper investigates the link between domestic demand pressure and exports by considering an error correction dynamic panel model for eleven euro area countries over the last two decades. The results suggest that there is a statistically significant substitution effect between domestic and foreign sales. Furthermore, this relationship appears to be asymmetric, as the link is much stronger when domestic demand falls than when it increases. Weakness in the domestic market translates into increased efforts to serve markets abroad, but, conversely, during times of boom, exports are not negatively affected by increasing domestic sales. This reorientation towards foreign markets was particularly important during the crisis period, and thus could represent a new adjustment channel to strong negative domestic shocks. The results have important policy implications, as this substitution effect between domestic and external markets might allow the euro area countries under stress to improve their trade outcomes with a relatively small downward pressure on domestic prices.

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Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Exports and domestic demand pressure: a dynamic panel data model for the euro area countries

et al. 2015

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“…Common wisdom generally attributes the strong correlation between trade openness and the synchronization of business cycles to a simple mechanism: as economies become more open, exports and imports represent a larger share of firms' total sales or input purchases. 2 1 This recent literature follows a more ancient research documenting the relationship between exports and domestic production at the country level (Ball et al, 1966, Dunlevy, 1980Haynes and Stone, 1983;Zilberfarb, 1980). Most of these papers tested the "capacity pressure" hypothesis (i.e.…”

Section: Ecb Working Paper 1720 August 2014mentioning

confidence: 99%

Export dynamics and sales at home

Berman

Berthou

Hericourt

2015

Journal of International Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated WO R K I N G PA P E R S E R I E S N O 17 20 / AU G U S T 2014 EXPORT DYNAMICS AND SALES AT HOME Nicolas Berman, Antoine Berthou and Jérôme HéricourtIn 2014 all ECB publications feature a motif taken from the €20 banknote.NOTE: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily refl ect those of the ECB. The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to fi nal publication. The views expressed in the paper are the ones of the author(s) and do not necessarily refl ect those of the ECB, the ESCB, and of other organisations associated with the Network. THE COMPETITIVENESS RESEARCH NETWORK AcknowledgementsWe thank the referees and the editor for insightful comments. Abstract. Using a French firm-level database that combines balance-sheet and productdestination-specific export information over the period 1995-2001, we study the interconnections between exports and domestic sales. We identify exogenous shocks that affect the firms' demand on foreign markets to instrument yearly variations in exports. We use alternatively as instruments product-destination specific imports or tariffs changes, and large foreign shocks such as financial crises or civil wars. Our results show that exogenous variations in foreign sales are positively associated with domestic sales, even after controlling for changes in domestic demand. A 10% exogenous increase in exports generates a 1 to 3% increase in domestic sales in the short-term. This result is robust to various estimation techniques, instruments, controls, and sub-samples. We provide empirical evidence suggesting that this positive effect of exogenous changes in exports on domestic sales is related to a relaxation of short-run liquidity constraints.JEL classification: F10, F44, L20 Keywords: Export dyn...

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“…Next, we expect the estimated coefficients of domestic and foreign demand to be in line with the basic economic principles; i.e. negative and positive coefficient, respectively (for details, see Ball, Eaton, & Steuer, 1966;Rahmaddi & Ichihashi, 2011).…”

Section: Datamentioning

confidence: 99%

Determinants of manufacturing industry exports in European Union member states: a panel data analysis

Sertić

Vučković

Perić

2015

Economic Research-Ekonomska Istraživanja

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This paper aims to provide analysis on the determinants of export performance on the extensive data-set of the 27 European Union member states' total manufacturing and high tech manufacturing industry. Hence, this paper adds to the existing empirical work by specifying an export performance equation not only as a function of income and price, as is traditionally done, but also industrial production and labour cost. For that purpose, dynamic panel data models are estimated by utilising the system GMM estimator for the period from 2000 to 2011. The obtained results indicate that both industrial production and domestic demand have a positive and statistically significant impact on total and high tech manufacturing exports. On the other hand, it is proven that foreign demand also has an impact on total manufacturing exports. Thus, the paper's contribution is reflected in the acknowledgement that a stable macroeconomic environment (contained in the significance of a dummy variable for the economic crisis in both models), boosting production capacity and domestic demand, is essential for better export performance and the competitiveness of the manufacturing industry in an increasingly competitive global economic climate. Finally, from the perspective of policy-making, the paper concludes that recovery in the manufacturing industry could be the much needed push from crisis to economic development.

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The Relationship Between United Kingdom Export Performance in Manufactures and the Internal Pressure of Demand

Cited by 70 publications

References 0 publications

Exports and domestic demand pressure: a dynamic panel data model for the euro area countries

Exports and domestic demand pressure: a dynamic panel data model for the euro area countries

Export dynamics and sales at home

Determinants of manufacturing industry exports in European Union member states: a panel data analysis

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