American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Trade Adjustment and Productivity in Large Crises
American Economic Review
vol. 104,
no. 3, March 2014
(pp. 793–831)
Abstract
We empirically characterize the mechanics of trade adjustment during the Argentine crisis. Though imports collapsed by 70 percent from 2000-2002, the entry and exit of firms or products at the country level played a small role. The within-firm churning of imported inputs, however, played a sizeable role. We build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production. Import demand is non-homothetic and the implications of an import price shock depend on the full distribution of firm-level adjustments. An import price shock generates a significant decline in productivity.Citation
Gopinath, Gita, and Brent Neiman. 2014. "Trade Adjustment and Productivity in Large Crises." American Economic Review, 104 (3): 793–831. DOI: 10.1257/aer.104.3.793Additional Materials
JEL Classification
- F14 Empirical Studies of Trade
- F31 Foreign Exchange
- F43 Economic Growth of Open Economies
- L60 Industry Studies: Manufacturing: General
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O19 International Linkages to Development; Role of International Organizations