Trade Adjustment and Productivity in Large Crises
American Economic Review
vol. 104,
no. 3, March 2014
(pp. 793-831)
Abstract
We empirically characterize the mechanics of trade adjustment during the Argentine crisis. Though imports collapsed by 70 percent from 2000-2002, the entry and exit of firms or products at the country level played a small role. The within-firm churning of imported inputs, however, played a sizeable role. We build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production. Import demand is non-homothetic and the implications of an import price shock depend on the full distribution of firm-level adjustments. An import price shock generates a significant decline in productivity.Citation
Gopinath, Gita, and Brent Neiman. 2014. "Trade Adjustment and Productivity in Large Crises." American Economic Review, 104 (3): 793-831. DOI: 10.1257/aer.104.3.793Additional Materials
JEL Classification
- F14 Empirical Studies of Trade
- F31 Foreign Exchange
- F43 Economic Growth of Open Economies
- L60 Industry Studies: Manufacturing: General
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O19 International Linkages to Development; Role of International Organizations