Speaker: Eric Verhoogen, Columbia University¬†& NBER, joint with Paulo Bastos and Joanna Silva
Abstract: In this paper we investigate whether the destination of exports matters for the input prices paid by firms, using detailed customs and firm-level panel data from Portugal. We use exchange-rate movements as a source of exogenous variation in export destinations and find that exporting to richer countries leads firms to pay higher prices for inputs, and exporting to poorer countries leads firms to pay lower prices for inputs. There does does not appear to be a significant effect of exporting per se on input prices paid by firms. These results are consistent with recent models of quality and trade, in which firms sell higher-quality goods to richer countries, and producing high-quality outputs requires high-quality inputs.