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A Balls-and-Bins Model of Trade

Roc Armenter and Miklós Koren

American Economic Review, 2014, vol. 104, issue 7, 2127-51

Abstract: Many of the facts about the extensive margin of trade—which firms export, and how many products are sent to how many destinations—are consistent with a surprisingly large class of trade models because of the sparse nature of trade data. We propose a statistical model to account for sparsity, formalizing the assignment of trade shipments to country, product, and firm categories as balls falling into bins. The balls-and-bins model quantitatively reproduces the pattern of zero product- and firm-level trade flows across export destinations, and the frequency of multiproduct, multidestination exporters. In contrast, balls-and-bins overpredicts the fraction of exporting firms.

JEL-codes: F11 F14 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.7.2127
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Related works:
Working Paper: A Balls-and-Bins Model of Trade (2010) Downloads
Working Paper: A Balls-and-Bins Model of Trade (2008) Downloads
Working Paper: A Balls-and-Bins Model of Trade (2008) Downloads
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