Exports, Imported Inputs, and Domestic Supply Networks
Title: |
Exports, Imported Inputs, and Domestic Supply Networks |
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Number: |
19/08 |
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Author(s): |
Yusuf Emre Akgündüz, Salih Fendoğlu |
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Language: |
English |
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Date: |
May 2019 |
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Abstract: |
Exporters have large domestic supply networks. We examine the impact of import reliance within their domestic supply networks on exchange rate pass-through to export prices and volume. For identification, we use administrative firm-to-firm sales and firm-product-destination level customs databases from a large emerging market, Turkey. We find that (i) while exporters' degree of reliance on imported goods is 24\%, this number reaches nearly 45\% once their suppliers are taken into account; (ii) following a domestic currency depreciation, exporters that use imported inputs more or those working with import-intensive suppliers raise their producer-currency export prices significantly more and increase their export volumes significantly less; (iii) exporters with higher reliance on a single supplier have higher exchange rate pass-through to export prices; and (iv) exporters with higher overall import intensity experience greater disruption in their supply networks, e.g., they establish fewer new supplier linkages and terminate more of their existing linkages, following a domestic currency depreciation. |
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Keywords: |
Exchange rate pass-through, Exports, Import reliance, Domestic supply networks |
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JEL Codes: |
D24; F14; F31 |