Export Pricing In New Open Economy Macroeconomics: An Empirical Investigation

Export Pricing In New Open Economy

Macroeconomics: An Empirical Investigation

Miklós Koren

Ádám Szeidl

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János Vincze

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j

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Sij

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1

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).

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(= -=

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763//3 2 8

Table 1a

Table 1b

Exporter countries

Importer countries

Australia

Argentina

Austria

Australia

Belgium

Austria

Denmark

Belgium

Finland

Brazil

France

Canada

Germany

Colombia

Greece

Denmark

Ireland

Finland

Italy

France

Korea

Germany

Mexico

Greece

Netherlands

Hong Kong S. A. R. of China

New Zeeland

India

Norway

Indonesia

Poland

Ireland

Portugal

Italy

Spain

Japan

Sweden

Korea

Switzerland

Malaysia

Turkey

Mexico

United Kingdom

Netherlands

New Zeeland

Norway

Philippines

Poland

Portugal

Singapore

South Africa

Spain

Sweden

Switzerland

Thailand

Turkey

United Kingdom

Table 2

Volume of trade in the sample

Year

Volume

(billion USD)

Share of

world total

1975

91.1

8.5%

1976

104.0

8.7%

1977

120.9

8.9%

1978

199.3

12.7%

1979

219.7

11.0%

1980

254.3

10.7%

1981

233.5

9.9%

1982

234.3

10.6%

1983

243.7

11.1%

1984

256.1

11.1%

1985

368.6

15.7%

1986

442.9

16.7%

1987

542.0

17.3%

1988

621.2

17.3%

1989

523.7

13.5%

1990

621.8

14.1%

1991

626.3

13.9%

1992

696.4

13.8%

1993

626.2

12.8%

1994

708.5

13.1%

1995

948.9

14.9%

1996

1034.8

15.5%

1997

1048.6

15.1%

1998

1051.2

15.3%

1999

309.4

4.4%

2000

355.4

4.5%

Table 3

SITC

Description

Country

pairs

Trade volume

(billion USD)

Unit value

($/kg)

1121 Wine of fresh grapes including grape must 732 11.1 6.88

1124 Distilled alcoholic beverages 1,004 8.3 5.8

1222 Cigarettes 584 8.6 19.43

2432 Lumber, sawn, planed, etc. - conifer 634 4.9 10.29

2517 Sulphate wood pulp 405 6.6 2.28

3214 Coal /anthracite, bituminous/ 316 11.7 5.08

3310 Petroleum,crude & partly refined 200 58.4 17.17

3321 Motor spirit, gasolene and other light oils 484 14.7 5.29

3411 Gas, natural 380 12.9 18.65

5121 Hydrocarbons and their derivatives 803 11.2 27.47

5122 Alcohols,phenols,phenol-alcohols,glycerine 540 4.0 16.46

5125 Acids and their halogenated derivatives 1,142 12.4 11.3

5127 Nitrogen-function compounds 1,116 28.7 130.46

5128 Organo-inorganic & heterocyclic compounds 989 27.0 95.25

5310 Synthetic organic dyestuffs 1,016 7.8 40.47

5333 Prepared paints, enamels, lacquers, etc. 1,074 8.8 4.95

5530 Perfumery & cosmetics,dentifrices etc. 1,158 14.3 13.03

5811 Prods of condensation, polycond. & polyaddition 1,176 24.2 2.99

5812 Products of polymerization and copolymerization 1,379 64.1 2.47

5999 Chemical products and preparations,nes 1,217 25.5 21.64

6291 Rubber tyres & tubes for vehicles and aircraft 831 15.3 3.86

6411 Newsprint paper 509 7.9 1.89

6412 Other printing and writing paper, machine-made 1,032 17.3 14.3

6415 Machine-made paper & paperboard, simply fnshd 1,066 13.6 2.38

6419 Paper and paperboard in rolls or sheets nes 1,166 15.2 3.31

6429 Art. of paper pulp,paper or paperboard 1,183 9.7 6.13

6516 Yarn and thread of synthetic fibres 1,152 12.3 6.88

6522 Cotton fabrics, woven, other than grey 1,022 7.7 14.33

6535 Fabrics, woven, of synthetic fibres 1,085 12.7 14.29

6537 Knitted or crochd fabrics not elast nor rubberd 1,097 8.8 15.57

6554 Coated or impregnated textile fabrics & prod. 1,015 10.3 10.98

6727 Iron or steel coils for re-rolling 640 10.3 16.84

6732 Bars and rods of iron or steel, ex wire rod 923 6.9 54.06

6743 Plates etc of iron or steel uncoated under 3 mm 849 12.8 52.16

6748 Oth. coated iron or steel plates etc under 3 mm 951 12.9 21.66

6821 Copper and alloys, unwrought 658 9.6 9.07

6822 Copper and alloys of copper, worked 1,122 11.9 7.61

6841 Aluminium and aluminium alloys, unwrought 651 12.5 13.85

6842 Aluminium and aluminium alloys, worked 1,183 17.5 6.36

6942 Nuts, bolts, screws, rivets, washers, etc. 1,280 8.9 14.19

6952 Other tools for use in the hand or in machines 1,189 13.2 29.18

6981 Locksmiths wares 1,228 10.7 13.68

6989 Articles of base metals, nes 1,236 12.9 10

7114 Aircraft - incl jet propulsion - engines 618 18.9 603.03

7115 Internal combustion engines, not for aircraft 968 40.0 28.11

7143 Statistical machines-cards or tapes- 941 73.5 200.78

7149 Office machines, nes 1,019 62.0 196.2

Table 3 (continued)

SITC

Description

Country

pairs

Trade volume

(billion USD)

Unit value

($/kg)

7151 Machine-tools for working metals 854 16.0 18.79

7171 Textile machinery 901 10.4 1164.44

7182 Printing and bookbinding machinery 836 10.3 47.91

7184 Construction and mining machinery, nes 803 12.4 22.82

7191 Heating and cooling equipment 937 17.7 19.18

7192 Pumps and centrifuges 1,032 34.4 20.13

7193 Mechanical handling equipment 960 21.5 13.33

7195 Powered-tools, nes 938 12.0 37.53

7196 Other non-electrical machines 936 13.7 29.7

7197 Ball, roller or needle-roller bearings 863 7.7 40.55

7198 Machinery and mechanical appliances, nes 1,035 31.8 33.02

7199 Parts and accessories of machinery, nes 1,073 34.4 28.19

7221 Electric power machinery 921 30.2 22.38

7222 Apparatus for electrical circuits 1,194 48.2 44.13

7231 Insulated wire and cable 1,257 20.6 21.03

7241 Television broadcast receivers 735 13.4 75.63

7242 Radio broadcast receivers 677 4.9 82.52

7249 Telecommunications equipment nes 791 68.9 142.97

7250 Domestic electrical equipment 925 17.9 13.76

7291 Batteries and accumulators 821 5.5 28.02

7293 Thermionic valves and tubes, transistors, etc. 875 85.7 501.44

7294 Automotive electrical equipment 862 10.0 33.73

7295 Electrical measuring & controlling instruments 956 8.8 220.75

7299 Electrical machinery and apparatus, nes 966 20.8 53.9

7321 Passenger motor cars, other than buses 722 162.7 13.24

7323 Lorries and trucks, including ambulances, etc. 580 22.5 8.16

7325 Road tractors for tractor-trailer combinations 273 5.5 199.85

7328 Bodies & parts motor vehicles ex motorcycles 985 78.2 11.96

7331 Bicycles & other cycles, not motorized, & parts 734 4.6 22.42

7341 Aircraft, heavier-than-air 300 27.3 92010.54

7349 Parts of aircraft,balloons airships 680 10.3 640.76

7353 Ships and boats, other than warships 574 11.3 5116.92

8210 Furniture 1,083 34.6 10.65

8310 Travel goods,handbags & similar articles 922 5.0 32.52

8411 Clothing of text fabric, not knitted crocheted 1,039 35.7 48.3

8414 Clothing and accessories,knitted or crocheted 884 28.3 35.53

8510 Footwear 703 13.2 25.82

8616 Photographic & cinematographic equipment nes 722 3.8 68.9

8617 Medical instruments, nes 991 12.9 84.45

8619 Measuring,controlling & scientific instruments 945 25.3 100.96

8624 Photo. film etc & develpd film other than cine. 597 5.4 131.04

8911 Phonographs, tape & other sound recorders etc. 759 6.9 144.45

8912 Phonograph records,recorded tapes,oth.sound rec 1,012 18.6 468.08

8921 Books and pamphlets,printed 1,190 6.2 16.25

8930 Articles of artif.plastic materials,n.e.s. 1,308 38.0 6.66

8942 Childrens toys, indoor games, etc. 1,002 12.3 15.91

8944 Other sporting goods 872 4.0 21.16

Table 4

Decomposition of variance

Component

Degrees of

freedom

Explained

variance

Relative

contribution

Total variance

780,545

0.993

Exporter FE by product

2,270

0.229

23.0%

Importer FE by product

3,874

0.036

3.6%

Country pair FE

975

0.033

3.4%

Country pair shocks

22,737

0.039

4.0%

Residual

750,689

0.657

66.1%

Table 5

Price discrimination across destinations

Median Positive Negative

– 0.0244

20

46

0.0115

53

26

0.0973

68

6

0.1544

91

2

– 0.0750

5

60

Exporter × year FEs

Wald test for Xj=0

sig

not sig

Prob>F

93

1

Notes: Dependent variable is log export price in exporter currency. Standard errors in parentheses. All variables are in logs unless otherwise specified. Columns report the median coefficient across all 94 products and the number of significantly positive (at 5%) and significantly negative coefficients.

Bilateral distance

Common border

Importer real GDP per

capita

Importer total GDP

Importer price level

Table 6

LCP vs PCP

Median

+

–

Median

+

–

Median

+

–

ln Sij – ln Fij

0.0026

14

7

0.0117

17

5

0.0090

13

2

Cov(ln Yij, ln Ci)

– 1.0030

6

40

Cov(ln Yij, ln Sij)

0.0031

8

15

Importer per cap. GDP

– 0.0541

15

57

0.2935

49

4

0.2087

41

0

Importer total GDP

0.0131

49

23

– 0.2706

5

50

– 0.0852

11

31

Importer price level

0.1550

75

4

0.2472

54

10

0.1188

94

0

Exporter unit labor cost

0.9025

94

0

0.8270

93

1

Exporter per cap. GDP

0.3986

44

14

– 0.5018

5

55

Exporter total GDP

– 0.2889

14

38

0.3146

59

9

Exporter price level

– 0.4757

10

48

– 0.7182

3

78

Bilateral distance

0.1557

89

1

Common border

– 0.0751

4

58

AR(1) coefficient

0.43

Exporter × year FEs

Country pair FEs

Notes: Dependent variable is log export price in exporter currency. All variables are in logs unless otherwise specified. GDP and price level are one-year lags. Significance at 10, 5 and 1% is denoted by *,**,***, respectively. Columns report the median coefficient across all 94 products and the number of significantly positive (at 5%) and significantly negative coefficients.

OLS

AR(1) error term

YES

YES

(1)

(2)

(3)

YES

Table 7

Rigid vs flexible prices

Median

+

–

Median

+

–

ln Sij – ln Fij

0.0117

17

5

0.0120

18

4

– 0.0005

– 0.0012

(0.0214) (0.0210)

Importer per cap. GDP

0.2935

49

4

0.3080

50

4

– 0.0731

– 0.0362

(0.1690) (0.1693)

Importer total GDP

– 0.2706

5

50

– 0.2746

4

51

0.0549

0.0943

(0.1264) (0.1267)

Importer price level

0.2472

54

10

0.2780

54

9

0.0645

– 0.0039

(0.1188) (0.1201)

Exporter unit labor cost

0.9025

94

0

0.9208

94

0

0.9673

1.0215

(0.0523) (0.0539)

Exporter per cap. GDP

0.3986

44

14

0.4457

45

15

0.2449

0.2804

(0.3269) (0.3300)

Exporter total GDP

– 0.2889

14

38

– 0.3150

13

40

– 0.6021

– 0.6767

(0.2656) (0.2669)

Exporter price level

– 0.4757

10

48

– 0.4114

10

46

– 0.0701

0.0523

(0.2790) (0.2813)

Observations

sig

not sig

4,241

4,155

Hausman test

20

74

52.12

Country pair FEs

YES

YES

Notes: Dependent variable is log export price in exporter currency. All variables are in logs unless otherwise specified. GDP and price level are one-year lags. Exporter unit labor cost is instrumented with lagged ULC, price level, exchange rate and GDP. Significance at 10, 5 and 1% is denoted by *,**,***, respectively. Columns report the median coefficient across all 94 products and the number of significantly positive (at 5%) and significantly negative coefficients.

OLS

IV

OLS

IV

SITC 6411

(3)

(4)

(1)

(2)

Table 8

Price taking

Median

+

–

Median

+

–

0.0667

55

3

0.0208

35

24

0.2615

0.0483

(0.0620) (0.1031)

– 0.0009

23

28

0.0003

33

26

– 0.0533

0.0155

(0.0114) (0.0091)

0.1054

69

4

0.1007

62

5

0.2470

0.0635

(0.0246) (0.0249)

0.1713

89

2

0.1704

89

2

0.1798

0.1260

(0.0147) (0.0160)

– 0.1176

3

44

– 0.1169

3

42

– 0.4066

– 0.1179

(0.0740) (0.0655)

Observations

sig

not sig

5,526

5,609

Hausman test

30

64

3.20

0.02

Exporter × year FEs

YES

YES

(1)

(2)

(3)

(4)

IV

IV

OLS

IV

SITC 7195

SITC 7143

YES

YES

Notes: Dependent variable is log export price in exporter currency. All variables are in logs unless otherwise specified. GDP and price level are one-year lags. The price of big exporters instrumented with the share of big exporters, their average GDP, price level, unit labor cost and their average distance to country j. Significance at 10, 5 and 1% is denoted by *,**,*** respectively. Columns report the median coefficient across all 94 products and the number of significantly positive (at 5%) and significantly negative coefficients.

Average price of big

exporters

Bilateral distance

Common border

Importer total GDP