This paper finds that U.S. consumer prices fell substantially due to increased trade with China. With comprehensive price micro-data and two complementary identification strategies, we estimate that a 1pp increase in import penetration from China causes a 1.91% decline in consumer prices. This price response is driven by declining markups for domestically-produced goods, and is one order of magnitude larger than in standard trade models that abstract from strategic price-setting. The estimates imply that trade with China increased U.S. consumer surplus by about $400,000 per displaced job, and that product categories catering to low-income consumers experienced larger price declines. potential omitted variable biases and reverse causality. For example, China has a comparative advantage in specific product categories that may be on different inflation trends, such as consumer electronics or apparel. To overcome this challenge we use two complementary research designs borrowed from recent work by Pierce and Schott (2016a) and Autor et al. (2014), who study the consequences of trade with China on employment across U.S. industries. 2 Pierce and Schott (2016a) leverage a change in U.S. trade policy passed by Congress in October 2000, which eliminated potential tariff increases on Chinese imports. This research design uses transparent policy variation and lends itself to sharp tests for pretrends, but the effects of changes in policy uncertainty may differ from those of more common permanent changes in tariffs (e.g., Handley and Limão (2017)). To gauge the stability and generalizability of our main estimates, we also use the empirical strategy of Autor et al. (2014), who instrument for changes in import penetration from China across U.S. industries with contemporaneous changes observed in eight comparable economies. 3To assess the plausibility of a causal interpretation of our estimates, we implement several falsification and robustness tests. The results all support the validity of the exclusion restrictions. First, for each of the two instruments, we implement pre-trend tests and consider alternative specification choices, with different sets of fixed effects, time-varying controls and sample restrictions. There are no pre-trends and the estimated price effect is stable across specifications. Second, we study the sensitivity of our baseline estimate to aggregation choices by aggregating our data to the level of broader industries (as defined by the BEA's input-output table), and we use alternative measures of changes in import penetration from China (including or excluding retail margins, and accounting for changes in trade with trading partners of the U.S. other than China). We find that the estimated price response remains stable. Third, with the instrument from Pierce and Schott (2016a), we implement a stringent triple-difference test using price data from France. We find that there is no similar reaction of prices in France, where there was no policy change. Finally, using both instruments jointly, we run the tes...

This paper analyzes firm growth along two margins: the extensive margin (adding more establishments) and intensive margin (adding more workers per establishment). We utilize administrative datasets to document the behavior of these two margins in relation to changes in the U.S. firm size distribution. Between 1990 and 2015, we find that the significant increase in average firm size was driven primarily by the expansion along the extensive margin, particularly in superstar firms. We develop a general equilibrium model of endogenous innovation that features both extensive and intensive margins of firm growth. We estimate the model to uncover the fundamental forces that caused the changes over this time period through the lens of our model. We find that, over time, the cost of innovations that lead to new establishments has declined for firms who are innovative in that dimension. Meanwhile, the duration that a firm can enjoy high growth through such innovation became shorter, and firm entry became more costly.

Using Brazilian export data that, unlike many trade data sets, have a full record of small export sales, this paper reconsiders trade elasticities and the welfare gains from trade. Using the Brazilian data, this paper provides novel evidence on the properties of the distributions of log-export sales and shows that the double exponentially modified Gaussian (EMG) distribution parsimoniously captures these properties. Using the double EMG distribution in a standard monopolistic competition model of trade, this paper demonstrates that data truncation, which is prevalent in many data sets, leads to an upward bias in measuring the partial elasticity of trade with respect to variable trade costs. This bias subsequently leads to the underestimation of the gains from trade by 1% to 9% depending on the extent of data truncation, a range that is commensurate with typical economic growth and large booms.Résumé. Double distribution gaussienne modifiée de façon exponentielle (EMG) et élasticités commerciales. En s'appuyant sur les données relatives aux exportations brésiliennes consignant, contrairement à de nombreux autres ensembles de données, tous les volumes de ventes à l'exportation y compris les plus petits, cet article réexamine l'élasticité des échanges et les bienfaits sociaux en découlant. Grâce à ces données, l'article offre un nouvel éclairage sur les propriétés des distributions relatives aux ventes à l'exportation consignées, et montre que la double distribution gaussienne modifiée de façon exponentielle (EMG) ne reflète que partiellement ces propriétés. En utilisant cette double distribution dans un modèle commercial standard caractérisé par une concurrence monopolistique, cet article démontre que la troncature des données, fréquente dans de nombreux ensembles de données, génère des erreurs systématiques par excès lorsque l'on mesure l'élasticité partielle des échanges par rapport aux coûts commerciaux variables.