Firms in the Global Economy
Paper Session
Friday, Jan. 3, 2025 8:00 AM - 10:00 AM (PST)
- Chair: Rodrigo Adao, University of Chicago
Demand Uncertainty, Selection, and Trade
Abstract
This paper examines the role of uncertainty on elasticities of trade flows with respect to variable trade costs in a canonical model of trade with monopolistic competition and heterogeneous firms. We identify two channels through which uncertainty impacts trade: through export participation thresholds (the selection effect) and the distribution of shocks governing export selection (the dispersion effect). While the selection effect dampens trade elasticities under uncertainty, the dispersion effect is ambiguous. We develop a methodology for using customs firm-level data to quantify trade elasticities under uncertainty, and the magnitude of each of the two channels through which uncertainty impacts trade. We find that uncertainty amplifies trade elasticities, on average, indicating that the dispersion effect of idiosyncratic firm-level shocks dominates -- though the effect is heterogeneous across industries. The overall magnitude of the endogenous selection mechanism on trade elasticities is small, indicating that the main drivers of trade in this class of trade models are overwhelmingly incumbent firms.Global Value Chains: Frim-Level Evidence from the United States
Abstract
Using confidential microdata from the U.S. Census Bureau, we measure the extent of international inputs embodied in U.S. exports at the level of the establishment and firm, providing a new way to characterize global value chains (GVCs) in the United States between 2002-2017. A direct link between imported inputs, production, and exports at a granular level provides a natural benchmark against which alternative measures of GVCs—such as those built from combining national-level input-output tables—can be assessed. Such comparisons yield insights on the role of aggregation bias and proportionality assumptions on multi-country supply chain measurement. This new data resource provides a window into the ways U.S. firms are linked to multiple markets through both foreign sourcing and foreign sales. In addition, we quantify the roles of gravity and regional trade agreements on the magnitude and concentration of these multi-country linkages. The analysis provides insights into the factors influencing the flows of global value chains and their resilience.Applications of Deep Learning-Based Probabilistic Approach to "Combinatorial"" Problems in Economics"
Abstract
Many "combinatorial"" problems in economics arise from the static or discrete timing assumption that condenses a series of simple binary choices scattered randomly over time into a single instance. Leaning on this insightJEL Classifications
- F1 - Trade