Firm Export Dynamics in Interdependent Markets

Alonso Alfaro-Ureña, Juanma Castro-Vincenzi, Sebastián Fanelli and Eduardo Morales
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Alonso Alfaro-Ureña: Banco Central de Costa Rica and Universidad de Costa Rica
Juanma Castro-Vincenzi: Harvard University
Sebastián Fanelli: CEMFI
Eduardo Morales: Princeton University

Working Papers from Princeton University. Economics Department.

Abstract: We estimate a model of firm export dynamics featuring cross-country complementarities. The firm decides where to export by solving a dynamic combinatorial discrete choice problem, for which we develop a solution algorithm that overcomes the computational challenges inherent to the large dimensionality of its state space and choice set. According to our estimated model, firms enjoy cost reductions when exporting to countries geographically or linguistically close to each other, or that share deep trade agreements; and countries, especially small ones, sharing these traits with attractive destinations receive significantly more exports than in the absence of complementarities.

Keywords: export dynamics; integer programming problem; deep free trade agreements (search for similar items in EconPapers)
JEL-codes: F12 F13 F14 (search for similar items in EconPapers)
Date: 2023-08
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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2023-18

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