Venting Out: Exports during a Domestic Slump

2021 ◽  
Vol 111 (11) ◽  
pp. 3611-3662
Author(s):  
Miguel Almunia ◽  
Pol Antràs ◽  
David Lopez-Rodriguez ◽  
Eduardo Morales
Keyword(s):  
Negative Impact ◽  
Firm Level ◽  
Export Markets ◽  
Demand Shocks ◽  
The Great Recession ◽  
Marginal Costs ◽  
Heterogeneous Firm ◽  
Heterogeneous Firm Model ◽  
Using Data ◽  
Firm Model

We study the relationship between domestic-demand shocks and exports using data for Spanish manufacturing firms in 2002–2013. Exploiting plausibly exogenous geographical variation caused by the Great Recession, we find that firms whose domestic sales declined by more experienced a larger increase in export flows, controlling for firms’ supply determinants. This result illustrates the capacity of export markets to counteract the negative impact of local demand shocks. By structurally estimating a heterogeneous-firm model of exporting with nonconstant marginal costs of production, we conclude that these firm-level responses accounted for half of the spectacular increase in Spanish goods exports over the period 2009–2013. (JEL D22, E32, F14, L60)

scholarly journals Global Firms

2018 ◽  
Vol 56 (2) ◽  
pp. 565-619 ◽  
Author(s):  
Andrew B. Bernard ◽  
J. Bradford Jensen ◽  
Stephen J. Redding ◽  
Peter K. Schott
Keyword(s):  
International Trade ◽  
Monopolistic Competition ◽  
Firm Characteristics ◽  
Export Markets ◽  
Market Shares ◽  
International Participation ◽  
Heterogeneous Firm ◽  
Heterogeneous Firm Model ◽  
Firm Model ◽  
The Impact

Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard heterogeneous firm model posits measure-zero firms that compete under monopolistic competition and decide whether to export to foreign markets. However, much of international trade is dominated by a few “global firms,” which participate in the international economy along multiple margins and account for substantial shares of aggregate trade. We develop a new theoretical framework that allows firms to have large market shares and decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. Using US firm and trade transactions data, we provide strong evidence in support of this framework's main predictions of interdependencies and complementarities between these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics and increasing their shares of aggregate trade. (JEL D22, F14, F23, L60, R32)

Optimal Trend Inflation

2019 ◽  
Vol 109 (2) ◽  
pp. 702-737 ◽  
Author(s):  
Klaus Adam ◽  
Henning Weber
Keyword(s):  
Inflation Rate ◽  
Heterogeneous Firms ◽  
Census Bureau ◽  
Firm Level ◽  
Us Economy ◽  
Trend Inflation ◽  
The Us ◽  
Heterogeneous Firm ◽  
Heterogeneous Firm Model ◽  
Firm Model

Sticky price models featuring heterogeneous firms and systematic firm-level productivity trends deliver radically different predictions for the optimal inflation rate than their popular homogenous-firm counterparts: (i) the optimal steady-state inflation rate generically differs from zero and (ii) inflation optimally responds to productivity disturbances. We show this by aggregating a heterogeneous-firm model with sticky prices in closed form. Using firm-level data from the US Census Bureau, we estimate the historically optimal inflation path for the US economy: the optimal inflation rate ranges between 1 percent and 3 percent per year and displays a downward trend over the period 1977–2015. (JEL C51, D24, D25, E31, E52)

scholarly journals Trade and Management

2020 ◽  
pp. 1-44
Author(s):  
Nicholas Bloom ◽  
Kalina Manova ◽  
John Van Reenen ◽  
Stephen Teng Sun ◽  
Zhihong Yu
Keyword(s):  
Randomized Control Trial ◽  
Production Efficiency ◽  
Management Practices ◽  
Export Performance ◽  
Effective Management ◽  
Randomized Control ◽  
Heterogeneous Firm ◽  
Heterogeneous Firm Model ◽  
Firm Model

We study how management practices shape export performance using matched productiontrade-management data for Chinese and American firms and a randomized control trial in India. Better managed firms are more likely to export, sell more products to more destinations, and earn higher export revenues and profits. They export higher-quality products at higher prices and lower quality-adjusted prices. They import a wider range of inputs and inputs of higher quality and price, from more advanced countries. We rationalize these patterns with a heterogeneous-firm model in which effective management improves performance by raising production efficiency and quality capacity.

scholarly journals Demand, Supply, and Markup Fluctuations

2021 ◽  
Author(s):  
Carlos D Santos ◽  
Luís F Costa ◽  
Paulo B Brito
Keyword(s):  
Structural Model ◽  
Supply And Demand ◽  
Aggregate Demand ◽  
Cost Curve ◽  
Firm Level ◽  
Demand Shocks ◽  
Marginal Costs ◽  
Price Adjustments ◽  
Marginal Cost Curve ◽  
Pass Through

Abstract Markup cyclicality has been central for debating policy effectiveness and understanding business-cycle fluctuations. However, measuring the cyclicality of markups is as important as understanding the microeconomic mechanisms underlying that cyclicality. The latter requires measurement of firm-level markups and separating supply from demand shocks. We construct a novel dataset with detailed (multi-)product-level prices for individual firms. By estimating a structural model of supply and demand, we evaluate how companies adjust prices and marginal costs as a response to shocks. We find that price markups respond positively to supply shocks and negatively to demand shocks. The mechanism explaining the observed markup behaviour is the same for both shocks: incomplete pass-through of changes along the marginal-cost curve to price adjustments. These observed price and output responses are consistent with dynamic demand considerations. Finally, we use our estimated shocks to show how aggregate markup fluctuations in the sample period are mostly explained by aggregate demand shocks.

scholarly journals Financial Development, Default Rates and Credit Spreads

2019 ◽  
Vol 130 (626) ◽  
pp. 534-553 ◽  
Author(s):  
Alessandro Peri ◽  
Omar Rachedi
Keyword(s):  
Financial Development ◽  
Credit Spreads ◽  
Fixed Cost ◽  
Annual Average ◽  
Corporate Default ◽  
Basis Point ◽  
Default Rates ◽  
Heterogeneous Firm ◽  
Heterogeneous Firm Model ◽  
Firm Model

Abstract US corporate default rates increased dramatically from an annual average of 0.32% between 1950 and 1984 up to 1.65% since 1985. Meanwhile, credit spreads rose by just 6 basis points. We argue that financial development—intended as an exogenous reduction in the fixed cost of borrowing—accounts for this evidence. In a heterogeneous firm model financial development boosts both default rates and firms’ expected recovery rates. These two effects offset each other, muting the change in the credit spreads. The model explains 63% of the rise in default rates and predicts a 6 basis point drop in the credit spreads.

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