Firm-to-firm Trade in Sticky Production Networks

Kevin Lim
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Kevin Lim: Dartmouth College

No 280, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops a structural model of trade between heterogeneous firms in which the network of firm-level input-output linkages is determined both dynamically and endogenously. Firms vary in the size of their customer and supplier bases, occupy heterogeneous positions in different supply chains, and adjust their sets of trade partners over time. Despite the rich heterogeneity and dynamics, the model remains computationally tractable. Using both cross-sectional and panel data on trading relationships between US firms, I estimate the model's key parameters via a simulated method of moments technique and assess its fit to the data. Simulations of the model are then used to study how the structure and dynamics of the production network matter for the propagation of firm-level supply and demand shocks and their translation into aggregate effects.

Date: 2017
New Economics Papers: this item is included in nep-bec, nep-dge, nep-int and nep-net
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:280

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