Shipment frequency of exporters and demand uncertainty

  • Gábor Békés
  • Lionel Fontagné
  • Balázs Muraközy
  • Vincent Vicard
Original Paper
  • 55 Downloads

Abstract

This paper examines how exporting firms adapt to the uncertainty stemming from demand volatility. By using monthly customs data from France, we decompose exports into different extensive and intensive margins including two novel margins: the number of months the firms exported (frequency) and the average export value per month. We establish four empirical patterns. First, firms export less to markets with higher demand volatility. Second, this effect is mainly explained by the frequency margin. Third, volatility affects the frequency margin through two channels: indirectly through lower trade volume and directly through logistics re-optimization. In particular, our results suggest that firms send less frequent, larger shipments to more uncertain markets conditional on total exports. Fourth, the effect of demand volatility is magnified on markets with longer time-to-ship. We propose that these observations are in line with simple stochastic inventory management approaches.

Keywords

Gravity Transport costs Frequency of trade Inventory model Firms 

JEL Classification

D40 F14 R41 

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Copyright information

© Kiel Institute 2017

Authors and Affiliations

  1. 1.Institute of Economics of CERS-HASBudapestHungary
  2. 2.Central European UniversityBudapestHungary
  3. 3.CEPRLondonUK
  4. 4.PSEUniversity Paris 1ParisFrance
  5. 5.CEPIIParisFrance
  6. 6.Banque de FranceParisFrance

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