Firm Export Dynamics in Interdependent Markets

Alonso Alfaro-Urena, Juanma Castro-Vincenzi, Sebastian Fanelli and Eduardo Morales

No 18403, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We estimate a model of firm export dynamics featuring cross-country complementarities. The firm decides where to export by solving a dynamic combinatorial discrete choice problem, for which we develop a solution algorithm that overcomes the computational challenges inherent to the large dimensionality of its state space and choice set. According to our estimated model, firms enjoy cost reductions when exporting to countries geographically or linguistically close to each other, or that share deep trade agreements; and countries, especially small ones, sharing these traits with attractive destinations receive significantly more exports than in the absence of complementarities.

JEL-codes: F12 F13 F14 (search for similar items in EconPapers)
Date: 2023-08
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