An Empirical Dynamic Model of Trade with Consumer Accumulation

Paul Piveteau

American Economic Journal: Microeconomics, 2021, vol. 13, issue 4, 23-63

Abstract: This paper develops a dynamic structural model of trade in which firms slowly accumulate consumers in foreign markets. Estimating the model using export data from individual firms and a particle Markov chain Monte Carlo estimator, the model predicts lower survival rates for new exporters and estimates low entry costs of exporting—less than half of those estimated in the absence of consumer accumulation. Using simulations and out-of-sample predictions, I show that the introduction of such frictions and the reduction in estimated entry costs allow the model to match important facts regarding the aggregate response of international trade to shocks.

JEL-codes: D22 F12 F14 L66 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (15)

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DOI: 10.1257/mic.20190051

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