Working Paper: NBER ID: w31610
Authors: Alonso Alfarourena; Juanma Castrovincenzi; Sebastian Fanelli; Eduardo Morales
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. Countries, especially small ones, sharing these traits with attractive destinations receive significantly more exports than in the absence of complementarities.
Keywords: Export Dynamics; Cross-Country Complementarities; Trade Policy
JEL Codes: F12; F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exporting to one country (F10) | likelihood of exporting to another (F10) |
| exporting to one country (F10) | cost reductions when exporting to geographically or linguistically close countries (F12) |
| cross-country complementarities (F12) | number of firm-country-year triplets with positive exports (F10) |
| cross-country complementarities (F12) | total exports (F10) |
| Brexit (F19) | total exports (F10) |
| Brexit (F19) | number of exporters to the UK (F10) |
| signing preferential trade agreements (PTAs) (F13) | exports to countries benefiting from tariff eliminations (F10) |
| signing preferential trade agreements (PTAs) (F13) | total exports (F10) |