American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Imported Inputs and Productivity
American Economic Review
vol. 105,
no. 12, December 2015
(pp. 3660–3703)
Abstract
We estimate a model of importers in Hungarian microdata and conduct counterfactual analysis to investigate the effect of imported inputs on productivity. We find that importing all input varieties would increase a firm's revenue productivity by 22 percent, about one-half of which is due to imperfect substitution between foreign and domestic inputs. Foreign firms use imports more effectively and pay lower fixed import costs. We attribute one-quarter of Hungarian productivity growth during the 1993-2002 period to imported inputs. Simulations show that the productivity gain from a tariff cut is larger when the economy has many importers and many foreign firms. (JEL D24, F13, F14, L60)Citation
Halpern, László, Miklós Koren, and Adam Szeidl. 2015. "Imported Inputs and Productivity." American Economic Review, 105 (12): 3660–3703. DOI: 10.1257/aer.20150443Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- L60 Industry Studies: Manufacturing: General