This paper analyzes the performance of global value chains during the trade collapse.To do so, it exploits a unique transaction-level dataset on French …rms containing information on cross-border monthly transactions matched with data on worldwide intra-…rm linkages as de…ned by property rights (multinational business groups, hierarchies of …rms).This newly assembled dataset allows us to distinguish …rm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Ampli…ed ‡uctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip e¤ect" and have been attributed to the adjustment of inventories within supply chains. In this paper we …rst con…rm the existence of such an e¤ect due to trade in intermediates, and we underline the role that di¤erent organizational modes can play in driving this adjustment.JEL codes: F23, F15, L22.Keywords: trade collapse, multinational …rms, global value chains, hierarchies of …rms , vertical integration. Non-technical summaryThe "Great Trade Collapse" has been one of the most striking features of the recent global financial crisis, with the ongoing recovery still driving a wedge between output and trade. The drop in trade flows has been very fast, particularly severe and synchronized across all countries, as several empirical studies already suggest. Such features make the current trade drop quite unique among the many episodes of trade decline typically associated to economic crises, and a number of transmission mechanisms have been proposed which could account for these peculiarities. Among those mechanisms, a particular role has been attributed to the emergence over the last decade of global supply chains, and to the different compositional effects of the demand shock entailed by vertical linkages on trade and GDP.In this paper we exploit transaction-level French trade data matched with ownership data for the period 2007-2009 to find evidence of a role for global value chains in explaining the magnitude of the trade collapse. Consistent with other results, we find that trade in intermediates has been the main driver of the trade collapse. However we also find that different organizational modes of the supply chain entailed different dynamic responses: related-party trade in intermediates exhibits a faster drop followed by a faster rebound with respect to arm's length trade in intermediates. In other words, trade originated within multinational groups seems to have reacted faster to the negative demand shock but has also recovered faster in the following months than arm's length trade. Among the alternative channels of t...

This paper analyzes the performance of global value chains during the trade collapse.To do so, it exploits a unique transaction-level dataset on French …rms containing information on cross-border monthly transactions matched with data on worldwide intra-…rm linkages as de…ned by property rights (multinational business groups, hierarchies of …rms).This newly assembled dataset allows us to distinguish …rm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Ampli…ed ‡uctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip e¤ect" and have been attributed to the adjustment of inventories within supply chains. In this paper we …rst con…rm the existence of such an e¤ect due to trade in intermediates, and we underline the role that di¤erent organizational modes can play in driving this adjustment.JEL codes: F23, F15, L22.Keywords: trade collapse, multinational …rms, global value chains, hierarchies of …rms , vertical integration. Non-technical summaryThe "Great Trade Collapse" has been one of the most striking features of the recent global financial crisis, with the ongoing recovery still driving a wedge between output and trade. The drop in trade flows has been very fast, particularly severe and synchronized across all countries, as several empirical studies already suggest. Such features make the current trade drop quite unique among the many episodes of trade decline typically associated to economic crises, and a number of transmission mechanisms have been proposed which could account for these peculiarities. Among those mechanisms, a particular role has been attributed to the emergence over the last decade of global supply chains, and to the different compositional effects of the demand shock entailed by vertical linkages on trade and GDP.In this paper we exploit transaction-level French trade data matched with ownership data for the period 2007-2009 to find evidence of a role for global value chains in explaining the magnitude of the trade collapse. Consistent with other results, we find that trade in intermediates has been the main driver of the trade collapse. However we also find that different organizational modes of the supply chain entailed different dynamic responses: related-party trade in intermediates exhibits a faster drop followed by a faster rebound with respect to arm's length trade in intermediates. In other words, trade originated within multinational groups seems to have reacted faster to the negative demand shock but has also recovered faster in the following months than arm's length trade. Among the alternative channels of t...

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, and of other organisations associated with the Network. Terms of use: Documents in EconStor may ECB Working Paper 1681, May 2014 1Non-technical summaryThe rebalancing of external accounts across countries is traditionally seen in the economic literature, in the context of the so called transfer problem. The basic mechanism of the adjustment is a transfer of real resources from debtor countries to the rest of the world, leading to a decrease in domestic spending relative to production, and to a simultaneous relative increase abroad. The macroeconomic costs of the external rebalancing may be divided conceptually in two parts: the decrease in domestic spending and welfare (the primary burden of a transfer), and the real exchange rate depreciation (the secondary burden of a transfer). As Obstfeld and Rogo (2001), (2005), (2007) Drawing from this literature, this paper adds two main elements. First, it concentrates on the external readjustment of Euro area countries, which has the double dimension of adjustments within the area (i.e. in the common currency) and outside the euro area (which include changes in the euro exchange rate). To do so, the paper presents a three-country general equilibrium model with a tradable and a non-tradable sector, where rms are heterogeneous in terms of their productivity. Second, it utilises for the calibration of the model a novel rm level data base collected by CompNet, a competitiveness research network among EU central banks. The rm-level empirical evidence collected by the network shows that rm size and productivity are highly heterogeneous across Euro area countries. More specically, in each Euro area country, rm productivity is not normally distributed. The distribution of rm productivity is rather characterised by a relatively large number of low productive rms and a small number of highly productive rms.The mechanism of transmission in the model is as follows. The transfer of resources associated with the external adjustment increases the demand of exports of the decit countries, while decreasing their demand of imports. The higher relative demand for tradable goods produced by the decit country leads to a decrease in the producti...

The exchange rate, asymmetric shocks and asymmetric distributions ECB Working Paper, No. 1801 Provided in Cooperation with: European Central Bank (ECB)Suggested Citation: Demian, Calin-Vlad; di Mauro, Filippo (2015) : The exchange rate, asymmetric shocks and asymmetric distributions, ECB Working Paper, No. 1801, ISBN 978-92-899-1614 Non-technical SummaryThe link between exchange rates and international trade has been the subject of a broad body of literature without a clear consensus on the size of the effect emerging. Overall, there is a disconnect between estimates using aggregate data and the ones using firm level information: macro estimates tend to be insignificant or very close to zero while micro based research tends to find significant and economically meaningful results. This paper attempts to bridge the gap between these two strands of the literature by using sector level productivity statistics derived from firm level data as additional explanatory variables for exports performance.The main value added of the paper is empirical and derives from the use of a novel data set of productivity statistics for 22 sectors in 10 European Union (EU) countries over 11 years, constructed from firm level data, as part of the CompNet project at the ECB (Lopez-Garcia, di Mauro et al. 2015).Four main results emerge from our estimations:1. The inclusion of the productivity distribution in the export equation drastically affects the average elasticity estimate by reducing unobserved bias. In our benchmark specification, it more than doubles the estimated elasticity from 34% to 77%. Having derived sector specific elasticities allows us also to compute country and EU-wide sector specific elasticities that are reliably identified.2. In line with previous literature, the exchange rate elasticity of exports is lower in sectors where the dispersion of firm productivity is higher.3. Exports appear to react mostly to appreciations rather than depreciations. More specifically, in our preferred specification, the exchange rate elasticity is about 80% in the case of appreciation and statistically not significant in the case of depreciation. Moreover, the size of the coefficient in case of appreciation is much larger than the baseline estimate, indicating that most of the empirically estimated elasticity results from firms' response to appreciation. The negative relationship between a sector's productivity dispersion and export elasticity still holds, but it is significant only in the case of appreciation.4. Exchange rate movements matters more when they are relatively sizeable. To show this, we split the sample in relation to the size of the exchange rate change -i.e. outer 20% and 10-90% range of the distribution, respectively. Results show that in the case of small movements -which in our sample are those between 9% depreciation and 12% appreciation -the exchange rate elasticity is smaller than for extreme movements.

This paper analyzes the performance of global value chains during the trade collapse.To do so, it exploits a unique transaction-level dataset on French …rms containing information on cross-border monthly transactions matched with data on worldwide intra-…rm linkages as de…ned by property rights (multinational business groups, hierarchies of …rms).This newly assembled dataset allows us to distinguish …rm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Ampli…ed ‡uctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip e¤ect" and have been attributed to the adjustment of inventories within supply chains. In this paper we …rst con…rm the existence of such an e¤ect due to trade in intermediates, and we underline the role that di¤erent organizational modes can play in driving this adjustment.JEL codes: F23, F15, L22.Keywords: trade collapse, multinational …rms, global value chains, hierarchies of …rms , vertical integration. Non-technical summaryThe "Great Trade Collapse" has been one of the most striking features of the recent global financial crisis, with the ongoing recovery still driving a wedge between output and trade. The drop in trade flows has been very fast, particularly severe and synchronized across all countries, as several empirical studies already suggest. Such features make the current trade drop quite unique among the many episodes of trade decline typically associated to economic crises, and a number of transmission mechanisms have been proposed which could account for these peculiarities. Among those mechanisms, a particular role has been attributed to the emergence over the last decade of global supply chains, and to the different compositional effects of the demand shock entailed by vertical linkages on trade and GDP.In this paper we exploit transaction-level French trade data matched with ownership data for the period 2007-2009 to find evidence of a role for global value chains in explaining the magnitude of the trade collapse. Consistent with other results, we find that trade in intermediates has been the main driver of the trade collapse. However we also find that different organizational modes of the supply chain entailed different dynamic responses: related-party trade in intermediates exhibits a faster drop followed by a faster rebound with respect to arm's length trade in intermediates. In other words, trade originated within multinational groups seems to have reacted faster to the negative demand shock but has also recovered faster in the following months than arm's length trade. Among the alternative channels of t...

This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from an increasing allocative efficiency of the European market accounted for 50% of European productivity growth while markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.

No abstract

No abstract