The entry, exit, and expansion of exporting firms play a key role in accounting for aggregate trade fluctuations. This paper uses Brazilian microdata to show that the life cycles of exporters vary significantly across foreign markets: in destinations with lower export participation, overall turnover is higher but new exporters are larger and exit less frequently. To account for these facts, the paper develops a parsimonious theory of exporter dynamics that combines insights from static models of endogenous market penetration costs and dynamic sunk-cost models. When calibrated to match the Brazilian data, the model predicts stronger, but also more gradual, responses to trade reforms and larger consequences of trade policy uncertainty in markets with lower export participation.

Register here to receive an email with a Zoom link to the seminar.