Trade Adjustment and Productivity in Large Crises

Gita Gopinath and Brent Neiman

No 16958, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We empirically characterize the mechanics of trade adjustment during the Argen- tine crisis using detailed transaction-level customs data covering the universe of import transactions during 1996-2008. Though imports collapsed by nearly 70 percent from 2000-2002, the entry and exit of firms or products at the country level (the \extensive margin") played a small role in this adjustment. By contrast, the within-firm churning of inputs (the \sub-extensive margin") played a sizeable role, and we highlight significant heterogeneity in how firms adjusted their import mix. Motivated by these facts, we build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production to evaluate the channels through which a collapse in imports affects productivity. Import demand is non-homothetic and therefore the implications for productivity depend on the details of individual firm adjustments and cannot be summarized by the change in the aggregate import share. We simulate the model to discuss quantitatively these mechanisms in the context of an imported input cost shock that produces a significant productivity decline

JEL-codes: E32 F4 O47 (search for similar items in EconPapers)
Date: 2011-04
New Economics Papers: this item is included in nep-eff, nep-int and nep-mac
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Citations: View citations in EconPapers (37)

Published as “ Trade Adjustment and Productiv ity in Large Crises ” (with Brent Neiman) American Economic Review , March 2014, Volume 104 (3)

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Related works:
Journal Article: Trade Adjustment and Productivity in Large Crises (2014)
Working Paper: Trade Adjustment and Productivity in Large Crises (2014)
Working Paper: Trade adjustment and productivity in large crises (2011)
Working Paper: Trade Adjustment and Productivity in Large Crises (2011)
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