National Bureau of Economic Research Working Papers

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Offshoring and Inflation -- by Diego A. Comin, Robert C. Johnson

Did trade integration suppress inflation in the United States? We say no, in contradiction to the conventional wisdom. Our answer leverages two basic facts about the rise of trade: offshoring accounts for a large share of it, and it was a long-lasting, phased-in shock. Incorporating these features into a New Keynesian model, we show trade integration...

Sparse Network Asymptotics for Logistic Regression -- by Bryan S. Graham

Consider a bipartite network where N consumers choose to buy or not to buy M different products. This paper considers the properties of the logistic regression of the N × M array of “i-buys-j” purchase decisions, [Yij]1≤i≤N,≤j≤M, onto known functions of consumer and product attributes under asymptotic sequences where (i) both N and M grow large and...

The Gravitational Constant? -- by David S. Jacks, Kevin Hjortshøj O'Rourke, Alan M. Taylor

We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that gravity exerted its pull as early as 1700, but the distance effect...

Firm Input Choice Under Trade Policy Uncertainty -- by Kyle Handley, Nuno Limão, Rodney D. Ludema, Zhi Yu

We examine the role of trade policy uncertainty in shaping the import decisions of firms. If the adoption of a new input requires a sunk cost investment, then the prospect of price increases in that input, e.g. due to trade barriers, reduces the adoption of that input (a substitution effect) and possibly other inputs (complementarity via lower profits)....

Designing an International Economic Order: A Research Agenda -- by Renee Bowen, J. Lawrence Broz

The institutions that have sustained global economic cooperation for the past 75 years are under threat. Despite admonitions that global peace and prosperity are at risk, policymakers in important countries have ignored the rules of the multilateral order and moved down the path of unilateralism and economic nationalism. What role can social scientists...

Firm-Embedded Productivity and Cross-Country Income Differences -- by Vanessa I. Alviarez, Javier Cravino, Natalia Ramondo

We measure the contribution of firm-embedded productivity to cross-country income differences. By firm-embedded productivity we refer to the components of productivity that differ across firms and that can be transferred internationally, such as blueprints, management practices, and intangible capital. Our approach relies on microlevel data on the cross-border...

The Rise and Fall of Import Substitution -- by Douglas A. Irwin

In the 1950s, many economists believed that import substitution – policies to restrict imports of manufactured goods – was the best trade strategy to promote industrialization and economic growth in developing countries. By the mid-1960s, there was widespread disenchantment with the results of such policies, even among its proponents. This paper traces...

Anxiety or Pain? The Impact of Tariffs and Uncertainty on Chinese Firms in the Trade War -- by Felipe Benguria, Jaerim Choi, Deborah L. Swenson, Mingzhi Xu

The unexpected outbreak of the U.S.-China trade war led to dramatic increases in the import and export tariffs confronting Chinese firms. Due to firm-level differences in trade engagement, customs trade data combined with tariff changes allow us to measure firm-level exposure to the trade war. Further, by adopting a new textual analysis approach to...

Firm Dynamics and Trade -- by George A. Alessandria, Costas Arkolakis, Kim J. Ruhl

We review the literature that studies the dynamics of firms in foreign markets, both at the intensive and extensive margins, and their aggregate implications. We first summarize a set of micro facts on exporter entry, expansion, contraction, and exit and macro facts about the response of aggregate trade flows to trade-policy and business-cycle shocks....

Highways and Globalization -- by Taylor Jaworski, Carl Kitchens, Sergey Nigai

This paper quantifies the value of US highways and their contribution in shaping regional specialization patterns and facilitating internal and external market integration. We develop a multisector general equilibrium model of interregional and international trade with many locations in the United States (i.e., counties) and many countries. In the model,...

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