WHY
EXPORTS ADJUST: MISSING IMPORTED INPUTS OR LACK OF CREDIT?
Antonis
Kotidis
University
of Bonn
Dimitris Malliaropulos
University of Piraeus and the Bank of Greece
Abstract
This paper examines the role of imported intermediate
inputs and credit constraints on exports adjustment. For identification, we
study an episode of capital controls on outflows that exogenously restricted
firms’ ability to pay for imports and the large-scale credit crunch that
followed the imposition of controls in Greece in June 2015. Exploiting
within-firm variation across sectors, we find that lack of imported inputs
explains the drop in exports at the intensive margin, while lack of long-term
credit is associated with adjustments at the extensive margin. Multinationals
overcome liquidity constraints because of access to parents’ internal funds,
but not import constraints because of stronger linkages for specialized inputs
abroad. Our findings point to a novel result: the importance of both channels –
real and finance – in jointly determining trade adjustment, and the different
implications for the margins of trade.
JEL Classifications: F10, F14, F15,
F23, F36, F38
Keywords:
Firm Exports, Imported Intermediate Inputs, Credit
Constraints, Capital Controls, Multinational Activity
Acknowledgements: We would like to thank Sofia
Anyfantaki, Yannis Asimakopoulos, Heather Gibson, Sarantis Kalyvitis, Margaux
MacDonald, Kalina Manova, Margarita Katsimi, Thomas Moutos, Daniel Paravisini,
Neeltje van Horen and Dimitri Vayanos for fruitful discussions, as well as
conference participants at EARIE 2018 and CRETE 2018. The views expressed in
this paper are those of the authors and do not necessarily reflect those of the
Bank of Greece or the Eurosystem
Correspondence:
Antonis Kotidis
University of Bonn
Regina-Pacis-Weg 3
Bonn, D-53012, Germany
Email antonis.kotidis@uni-bonn.de