The Gains from Input Trade with Heterogeneous Importers
- (pp. 77-127)
Abstract
Firms differ substantially in their participation in foreign input markets. We develop a methodology to measure the aggregate effects of input trade that takes such heterogeneity into account. We provide a theoretical result that holds in a variety of settings: the firm-level data on value added and domestic expenditure shares in material spending is sufficient to compute the change in consumer prices due to a shock to the import environment. We characterize the bias of approaches that rely on aggregate statistics. In an application to French data, input trade reduces the prices of manufacturing products by 27 percent.Citation
Blaum, Joaquin, Claire Lelarge, and Michael Peters. 2018. "The Gains from Input Trade with Heterogeneous Importers." American Economic Journal: Macroeconomics, 10 (4): 77-127. DOI: 10.1257/mac.20160426Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- E31 Price Level; Inflation; Deflation
- F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F14 Empirical Studies of Trade
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 Firm Performance: Size, Diversification, and Scope
- L60 Industry Studies: Manufacturing: General
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