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Imported Inputs and Productivity

László Halpern (), Miklós Koren and Adam Szeidl

American Economic Review, 2015, vol. 105, issue 12, 3660-3703

Abstract: We estimate a model of importers in Hungarian microdata and conduct counterfactual analysis to investigate the effect of imported inputs on productivity. We find that importing all input varieties would increase a firm's revenue productivity by 22 percent, about one-half of which is due to imperfect substitution between foreign and domestic inputs. Foreign firms use imports more effectively and pay lower fixed import costs. We attribute one-quarter of Hungarian productivity growth during the 1993-2002 period to imported inputs. Simulations show that the productivity gain from a tariff cut is larger when the economy has many importers and many foreign firms. (JEL D24, F13, F14, L60)

JEL-codes: D24 F13 F14 L60 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20150443
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