Export Destinations and Input Prices
This paper examines the extent to which the destination of exports matters for the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. We use exchange-rate movements as a source of variation in export destinations and find that exporting to richer countries leads firms to charge more for outputs and pay higher prices for inputs, other things equal. The results are supportive of the hypothesis that an exogenous increase in average destination income leads firms to raise the average quality of goods they produce and to purchase higher-quality inputs.
We are grateful to Mine Senses, Michael Sposi and participants in several seminars for helpful comments and to Nicolas De Roux and Jonathan Dingel for excellent research assistance. Verhoogen thanks the New York Federal Reserve Bank for hospitality while the working paper was being completed. We remain responsible for any errors. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Paulo Bastos & Joana Silva & Eric Verhoogen, 2018. "Export Destinations and Input Prices," American Economic Review, vol 108(2), pages 353-392. citation courtesy of