Demand Learning and Firm Dynamics: Evidence from Exporters

Nicolas Berman (1) , Vincent Rebeyrol (2) , Vincent Vicard (3)

1 AMSE - Aix-Marseille Sciences Economiques
2 TSE-R - Toulouse School of Economics
3 Centre de recherche de la Banque de France

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 idiosyncratic demand in each market and update their beliefs as noisy information arrives. Firms update their beliefs to a given demand shock more, the younger they are. We test and empirically confirm this prediction, using the structure of the model, together with exporter-level data, to identify demand shocks and the firms’ beliefs about future demand. Consistent with theory, we also find the learning process to be weakened in more uncertain environments.

Mots clés: Exports; Demand; Firm growth; Belief updating; Uncertainty

Domaines: Economies et finances; Mathématiques [math]

Nicolas Berman, Vincent Rebeyrol, Vincent Vicard. Demand Learning and Firm Dynamics: Evidence from Exporters. Review of Economics and Statistics, 2019, 101 (1), pp.91-106. ⟨10.1162/rest_a_00731⟩. ⟨hal-02111159⟩