Results 1 - 10
of
95
New Trade Models, Same Old Gains?
, 2010
"... Micro-level data have had a profound in‡uence on research in international trade over the last ten years. In many regards, this research agenda has been very successful. New stylized facts have been uncovered and new trade models have been developed to explain these facts. In this paper we investiga ..."
Abstract
-
Cited by 40 (6 self)
- Add to MetaCart
Micro-level data have had a profound in‡uence on research in international trade over the last ten years. In many regards, this research agenda has been very successful. New stylized facts have been uncovered and new trade models have been developed to explain these facts. In this paper we investigate to which extent answers to new micro-level questions have a¤ected answers to an old and central question in the …eld: How large are the gains from trade? A crude summary of our results is: “So far, not much.”
The role of extensive and intensive margins and export growth”, National Bureau of Economic Research working paper No.13628
, 2007
"... We investigate and compare countries ’ export growth based on their performance at the extensive and intensive export margins. Our empirical approach is motivated by an exten-sion to the Melitz (2003) model of heterogeneous firms in which exporters are subject to a one-time sunk cost and also a per- ..."
Abstract
-
Cited by 37 (1 self)
- Add to MetaCart
We investigate and compare countries ’ export growth based on their performance at the extensive and intensive export margins. Our empirical approach is motivated by an exten-sion to the Melitz (2003) model of heterogeneous firms in which exporters are subject to a one-time sunk cost and also a per-period fixed cost. With imperfect information a firm may enter export markets but shortly exit when it learns its per-period fixed costs. We apply this insight to disaggregated export data and confirm that indeed most export relationships are very short lived. We then show that the survival issue is a significant factor in explaining differences in long run export performance. We find that developing countries would experi-ence significantly higher export growth if they were able to improve their performance with respect to the two key components of the intensive margin: survival and deepening.
Theories of Heterogeneous Firms and Trade.
- Annual Review of Economics.
, 2011
"... Abstract This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-ind ..."
Abstract
-
Cited by 36 (1 self)
- Add to MetaCart
Abstract This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and patterns of trade participation across firms and destination markets. Accounting for these empirical patterns reveals new mechanisms through which the aggregate economy is affected by trade liberalization, including endogenous increases in average industry and firm productivity. J.E.L. CLASSIFICATION: F10, F12, F14
The Extensive Margin of Exporting Goods: A Firm-Level Analysis.
, 2012
"... Abstract We examine three-dimensional panel data for Brazilian and Chilean manufacturing exporters, their products and destinations. The data show that (i) the distribution of the exporters' number of goods (the exporter scope) is robust within destinations and approximately Pareto with most f ..."
Abstract
-
Cited by 31 (8 self)
- Add to MetaCart
(Show Context)
Abstract We examine three-dimensional panel data for Brazilian and Chilean manufacturing exporters, their products and destinations. The data show that (i) the distribution of the exporters' number of goods (the exporter scope) is robust within destinations and approximately Pareto with most firms selling only one or two goods, and (ii) that the exporter scope is positively associated with average sales per good within destinations but not across destinations. We present a heterogeneous-firm model with product choice that implies these regularities and retains key predictions of previous trade models. We explain the regularities with convex product-entry costs that increase more than proportionally in scope on the distribution side. Keywords: International trade; heterogeneous firms; multi-product firms; firm and product panel data; Brazil; Chile JEL Classification: F12, L11, F14 * We thank Gilles Duranton, Jonathan Eaton, Elhanan Helpman, Kalina Manova, Gordon Hanson, Jim Rauch, Yixiao Sun and Daniel Trefler as well as seminar and conference participants for helpful comments and discussions. RobertoÁlvarez kindly shared Chilean exporter and product data for the year 2000. Oana Tocoian Hirakawa provided excellent research assistance. Muendler acknowledges NSF support (SES-0550699) with gratitude.
The extensive margin of exporting products: a firmlevel analysis. Working Paper.
, 2011
"... Abstract We use a panel of Brazilian exporters, their products, and destination markets to document a set of regularities for multi-product exporters. Our data reveal that multi-product firms systematically export their top products across multiple destinations but their lowest-selling products shi ..."
Abstract
-
Cited by 28 (3 self)
- Add to MetaCart
Abstract We use a panel of Brazilian exporters, their products, and destination markets to document a set of regularities for multi-product exporters. Our data reveal that multi-product firms systematically export their top products across multiple destinations but their lowest-selling products ship in smaller amounts than the lowest-selling products of small exporters. To account for these regularities, we develop a model of firm-product heterogeneity with local entry costs that depend on exporter scope (the number of a firm's products in a market). Estimating this model for the withinfirm sales distribution we find that firms face a strong decline in product sales with scope but also that market-specific entry costs drop fast. Counterfactual experiments with globally falling entry costs indicate that a large share of the simulated increase in trade is attributable to declines in the firm's entry cost for the first product. Keywords: International trade; heterogeneous firms; multi-product firms; firm and product panel data; Brazil JEL Classification: F12, L11, F14 * We thank David Atkin, Andrew Bernard, Thomas Chaney, Arnaud Costinot, Don Davis, Gilles Duranton, Jonathan Eaton, Elhanan Helpman, Kalina Manova, Gordon Hanson, Lorenzo Caliendo, Sam Kortum, Giovanni Maggi, Marc Melitz, Peter Neary, Jim Rauch, Steve Redding, Kim Ruhl, Peter Schott, Daniel Trefler and Jon Vogel as well as several seminar and conference participants for helpful comments and discussions. RobertoÁlvarez kindly shared Chilean exporter and product data for the year 2000, for which we report comparable results to our Brazilian findings in an online Data Appendix at URL econ.ucsd.edu/muendler/research. We present an extension of our model to nested CES in an online Technical Appendix at the same URL. Oana Hirakawa and Olga Timoshenko provided excellent research assistance. Muendler and Arkolakis acknowledge NSF support (SES-0550699 and SES-0921673) with gratitude.
Trade Theory with Numbers: Quantifying the Consequences of Globalization
- In: Helpman, E. (Ed.), Handbook of international economics
, 2013
"... We review a recent body of theoretical work that aims to put numbers on the consequences of globalization. A unifying theme of our survey is methodological. We rely on gravity models and demonstrate how they can be used for counterfactual analysis. We highlight how various economic considerations—ma ..."
Abstract
-
Cited by 23 (12 self)
- Add to MetaCart
We review a recent body of theoretical work that aims to put numbers on the consequences of globalization. A unifying theme of our survey is methodological. We rely on gravity models and demonstrate how they can be used for counterfactual analysis. We highlight how various economic considerations—market structure, firm-level heterogeneity, multiple sectors, intermediate goods, and multiple factors of production—affect the magnitude of the gains from trade liberalization. We conclude by discussing a number of outstanding issues in the literature as well as alternative approaches for quantifying the consequences of globalization.
A Theory of Entry into and Exit from Export Markets
, 2012
"... This paper introduces idiosyncratic firm efficiency shocks into a continuous-time general equilibrium model of trade with heterogeneous firms. The presence of sunk export entry costs and efficiency uncertainty gives rise to hysteresis in export market participation. A firm will enter into the export ..."
Abstract
-
Cited by 19 (1 self)
- Add to MetaCart
This paper introduces idiosyncratic firm efficiency shocks into a continuous-time general equilibrium model of trade with heterogeneous firms. The presence of sunk export entry costs and efficiency uncertainty gives rise to hysteresis in export market participation. A firm will enter into the export market once it achieves a given size, reflecting its efficiency, but may keep exporting even after its efficiency has fallen below its initial entry level. Some exporters will not be selling as much in the domestic market as other firms that never entered the foreign market. The model captures the qualitative features of firm birth, growth, export market entry and exit, and death found in the empirical literature. We calibrate the model to match relevant statistics of firms’ turnover and export dynamics in the United States, and show that the mode of globalization (a reduction in sunk costs as opposed to overhead costs), matters for a firm’s selection and persistence in export status. Trade liberalization via a reduction in sunk export entry costs reduces a firm’s export status persistence, while the opposite happens when liberalization takes place through a reduction in overhead export costs.
Demand Uncertainty: Exporting Delays and Exporting Failures" Mimeo
"... This paper presents a model of trade that explains why
rms wait to export and why many exporters fail. Firms face uncertain demands that are only realized after the
rm enters the destination. The model retools the timing of the resolution of uncertainty found in models with heterogeneity of
rm pr ..."
Abstract
-
Cited by 19 (1 self)
- Add to MetaCart
(Show Context)
This paper presents a model of trade that explains why
rms wait to export and why many exporters fail. Firms face uncertain demands that are only realized after the
rm enters the destination. The model retools the timing of the resolution of uncertainty found in models with heterogeneity of
rm productivity. This retooling addresses several shortcomings. First, the imperfect correlation of demands reconciles the sales variation observed in and across destinations. Second, since demands for the
rms output are correlated across destinations, a
rm can use previously realized demands to forecast unknown demands in untested destinations. The option to forecast demands causes
rms to delay exporting in order to gather more information about foreign demand. Third, since uncertainty is resolved after entry, many
rms enter a destination and then exit after learning that they cannot pro
t. This prediction reconciles the high rate of exit seen in the
rst years of exporting. Finally, when faced with multiple destinations to which they can export, many
rms will choose to sequentially export in order to slowly learn more about its chances for success in untested markets.
Power Laws in Firm Size and Openness to Trade: Measurement and Implications
- IMF Working Papers
, 2010
"... Existing estimates of power laws in firm size typically ignore the impact of international trade. Using a simple theoretical framework, we show that international trade systematically affects the distribution of firm size: the power law exponent among exporting firms should be strictly lower in abs ..."
Abstract
-
Cited by 19 (0 self)
- Add to MetaCart
Existing estimates of power laws in firm size typically ignore the impact of international trade. Using a simple theoretical framework, we show that international trade systematically affects the distribution of firm size: the power law exponent among exporting firms should be strictly lower in absolute value than the power law exponent among non-exporting firms. We use a dataset of French firms to demonstrate that this prediction is strongly supported by the data, both for the economy as a whole and at the industry level. Furthermore, the differences between power law coefficients for exporters and non-exporters are larger in sectors that are more open to trade. While estimates of power law exponents have been used to pin down parameters in theoretical and quantitative models, our analysis implies that the existing estimates are systematically lower than the true values. We propose two simple ways of estimating power law parameters that take explicit account of exporting behavior.
Trade, Inequality, and the Political Economy of Institutions", working paper, Chicago GSB
, 2007
"... We analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, or property rights. The literature on institutions has argued, both empirically and theoretically, that larger firms care less about good institutions and that ..."
Abstract
-
Cited by 13 (2 self)
- Add to MetaCart
(Show Context)
We analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, or property rights. The literature on institutions has argued, both empirically and theoretically, that larger firms care less about good institutions and that higher inequality leads to worse institutions. Recent literature on international trade enables us to analyze economies with heterogeneous firms, and argues that trade opening leads to a reallocation of production in which largest firms grow larger, while small firms become smaller or disappear. Combining these two strands of literature, we build a model which has two key features. First, preferences over institutional quality differ across firms and depend on firm size. Second, institutional quality is endogenously determined in a political economy framework. We show that trade opening can worsen institutions when it increases the political power of a small elite of large exporters, who prefer to maintain bad institutions. The detrimental effect of trade on institutions is most likely to occur when a small country captures a sufficiently large share of world exports in sectors characterized by economic profits.
