Trade effects of a negative export shock on direct exporters and wholesalers

Abstract

PurposeThis paper aims to investigate the effects of a multifaceted negative Russian export shock of 2014 on the exports Estonian firms that exported non-embargoed goods to Russia.Design/methodology/approachThe dataset covers all the Estonian exporters that exported non-embargoed goods to Russia in 2013 and the empirical analysis uses a difference-in-difference method in combination with the coarsened exact matching method to account for heterogeneities between the treatment and control groups.FindingsThe empirical findings show that wholesalers affected were generally able to show better export performance after the negative shock than direct exporters were. The trade performance after the shock was lower for both wholesalers and direct exporters that had lower initial productivity levels.Originality/valueAs a novelty, this study simultaneously addresses several firm heterogeneities to illustrate how the trade effects of a negative export shock differ between firms with different key characteristics, including between wholesalers and direct exporters.