Firm Level Heterogeneous Productivity and Demand Shocks: Evidence from Bangladesh

Hiau Looi Kee () and Kala Krishna ()

No 13698, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper looks at the predictions of a standard heterogeneous firm model regarding the exports of firms across markets in response to a particular trade policy "experiment" and compares these predictions to the data. A unique feature of our data is that it has information on the exports of the same firm to different markets which allows us to look for a new set of predictions of such models. We argue that while certain predictions seem consistent with the data, others are not. We then describe the patterns found in the data and argue that firm and market specific demand shocks help explain a number of these anomalies. These parsimoniously capture factors, like business contacts or networks, or even fashion shocks, that make buyers more attracted to one firm rather than another in a particular market.

JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-int
Note: ITI PR
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Citations: View citations in EconPapers (1)

Published as Hiau Looi Kee & Kala Krishna, 2008. "Firm-Level Heterogeneous Productivity and Demand Shocks: Evidence from Bangladesh," American Economic Review, American Economic Association, vol. 98(2), pages 457-62, May.

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