ABSTRACT
In this chapter, the authors consider the econometric testing of the relation between exports and the pressure of demand at the firm and industry level. The authors now build up a model of export determination in which the variables are expressed in terms of proportionate deviations from trend, but at the start it can be seen that there are going to be important differences between a macro model based upon national data and a firm model. The chapter suggests three-equation models: an export determination equation, a capacity utilization equation, and a home sales equation. The authors describe the nature of the tests and the problems concerned with the interpretation of the results. Two sets of models have been used: one based on explaining the level of United Kingdom (UK) exports and the other on the share of UK exports in the overseas market.
