Berman, Nicolas, Rebeyrol, Vincent and Vicard, Vincent (2019) Demand learning and firm dynamics: evidence from exporters. Review of Economics and Statistics, 101 (1). pp. 91-106.

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Identification Number : 10.7910/DVN/DMJREU


This paper provides direct evidence that learning about demand is an important driver of firms' dynamics. We present a model of Bayesian learning in which firms are uncertain about their idiosyncratic demand in each of the markets they serve, and update their beliefs as noisy information arrives. Firms are predicted to update more their beliefs to a given demand shock, the younger they are. We test and empirically confirm this prediction, using the structure of the model together with exporter-level data to identify idiosyncratic demand shocks and the firms' beliefs about future demand. Consistent with the theory, we also find that the learning process is weaker in more uncertain environments.

Item Type: Article
Language: English
Date: March 2019
Refereed: Yes
Uncontrolled Keywords: firm growth, belief updating, demand, exports, uncertainty
JEL Classification: D83 - Search; Learning; Information and Knowledge; Communication; Belief
F14 - Country and Industry Studies of Trade
L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 22 May 2018 08:57
Last Modified: 29 Nov 2021 15:47
OAI Identifier:
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