Working Paper: NBER ID: w5495
Authors: Deborah L. Swenson
Abstract: This paper studies the domestic content decisions of auto makers in the U.S. between 1984 and 1993 using foreign trade zone activity as a tool by which one can observe individual sourcing and production. The results show that although the domestic content of Japanese firms is rising, differences are not being eliminated completely. Also, the apparent elasticity of substitution is lower for Japanese than for U.S. firms. These results suggest that although transplant production may reduce the U.S. automotive deficit with Japan, transplant production will not cause its elimination.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in domestic content (F69) | aging of operations (D25) |
| transplant production (P23) | US automotive deficit with Japan (F14) |
| lower elasticity of substitution for Japanese firms (L23) | sourcing decisions influenced by national identity and operational characteristics (F23) |