The short-run effects of domestic demand pressure on export delivery delays for machinery

Abstract

Wells (1964) among others has argued that many export products are not similar to products sold in the home market and that in the short run production resources cannot be shifted easily between the production lines for foreign and domestic markets. On the other hand, a growing number of empirical studies on this subject has shown that, in fact, at least in the United Kingdom, exports were favorably affected by a cut in domestic demand pressure. l The present paper contributes to this debate by focusing on one particular industry, the machinery industry, 2 in three countries, Germany, the IJnited Kingdom, and the United States. Exports of machinery play a major part in deterk.lining the overall export performance of the principal industrial countries; they accounted for over 25 per cent of the exports of dermany, the United Kingdom, and the United States in 1970. Surprisingly, there have been onI:’ a few empirical studies on the short-run export behavior of this indt‘try in relation to domestic demand. Steuer et al. (1966) have shown that the flow of foreign orders received by the U.K. machine-tool industry was not significantly influenced by relative prices but was unfavorably