Date: 13 Dec 2022 (Tue)
CUHK-Tsinghua University Brownbag Seminar:
Boomerang in Exports: How Did the Chinese Exporters Respond to the Global Financial Crisis?
13 Dec 2022, Tuesday
12:20 pm – 1:20 pm (Hong Kong Time, UTC+8)
Jiawei Wu, Tsinghua University
Employing firm-level data of Chinese manufacturing sector from 2004 to 2013, this paper explores the relationship between exports and domestic sales. We construct a firm-level exposure to the external demand shock, obtaining two main findings: (i) in the short run, there exists a “boomerang” effect. Firms facing a lower external demand experienced a faster domestic sales expansion. (ii) while in the long run, there exists a “re-boomerang” effect. During the period of export recovery, firms with a higher export growth also experienced higher domestic sales. The first finding demonstrates the capacity of the domestic market as a “cushion” in face of a negative external shock. And the second finding can be explained by the increasing return to scale of exporting firms. Furthermore, by exploiting the dynamics and heterogeneity of firms' behavior, we find evidence of creative destruction on the firm level. The new entrants help to explain 31.31% of the export growth.