The Gains from Input Trade with Heterogeneous Importers

Joaquin Blaum, Claire Lelarge and M. Peters

Working papers from Banque de France

Abstract: Trade in intermediate inputs allows firms to reduce their costs of production and thus benefits consumers through lower prices of domestically produced goods. The extent to which firms participate in foreign input markets, however, varies substantially. We develop a methodology to measure how consumer prices are affected by input trade in environments that allow for such heterogeneity in import behavior. We provide a theoretical result that holds in a variety of settings: the firm-level data on value added and domestic expenditure shares in material spending are sufficient to compute changes in consumer prices. Approaches that abstract from firm level heterogeneity and rely on aggregate statistics give biased results. In an application to French data, we find that prices of manufacturing products would be 27% higher in the absence of input trade.

Keywords: Euro area countries; natural rate of interest; common monetary policy; fragmentation (search for similar items in EconPapers)
JEL-codes: D21 D22 F11 F12 F14 F62 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2016
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... l-612_2016-12-19.pdf (application/pdf)

Related works:
Journal Article: The Gains from Input Trade with Heterogeneous Importers (2018)
Working Paper: The Gains from Input Trade with Heterogeneous Importers (2016)
Working Paper: The Gains from Input Trade in Firm-Based Models of Importing (2016)
Working Paper: The Gains from Input Trade in Firm-Based Models of Importing (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:612

Access Statistics for this paper

More papers in Working papers from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().