Trade and Domestic Production Networks

Dhyne, Emmanuël; Kikkawa, Ayumu Ken; Mogstad, Magne; Tintelnot, Felix

doi:10.2139/ssrn.3339620

Cited by 9 publications

(12 citation statements)

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“…Regarding size categories, a much smaller share of small firms export and import, around 10%, as compared to large firms where the values lie around 50%. These results are in line with the findings for the U.S. by Antràs, Fort and Tintelnot (2017), for Argentina by Gopinath and Neiman (2014) and Tintelnot, Kikkawa, Mogstad, and Dhyne (2017) for Belgium and hint towards the importance of large firms coupled with the presence of a few highly connected industries as conduits of external shocks. In particular, Tintelnot et al (2017) indicate that for Belgium, 97% of firms acquire imported goods either directly or indirectly through their domestic network of suppliers.…”

Section: Introductionsupporting

confidence: 90%

Network-based macro fluctuations: what about an open economy?

Constantinescu

Barauskaite

2018

Baltic Journal of Economics

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Do input-output linkages of intermediate products affect the spread of sectoral shocks at the aggregate level in Lithuania, a small and open economy? What role does openness play in the empirical exercise? We answer these questions by: (i) constructing the Lithuanian input-output transactions tables with domestic-only and domestic and imported sector-by-sector direct requirements, and (ii) applying Acemoglu, Carvalho, Ozdaglar, and Tahbaz-Salehis [(2012). The network origins of aggregate fluctuations. Econometrica, 80(5), 1977-2016] network-based methodology and Gabaix and Ibragimov's [(2011). Rank-1/2: A simple way to improve the ols estimation of tail exponents. Journal of Business & Economic Statistics, 29(1), 24-39] modified log rank-log size regression. Our results indicate that the structure of input-output linkages cause aggregate economic volatility to decay at a rate lower than the established theoretical prediction. Indirect linkages play an equally important role for both domestic-only and aggregated domestic and import transactions.

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Section: Introductionsupporting

confidence: 90%

Network-based macro fluctuations: what about an open economy?

Constantinescu

Barauskaite

2018

Baltic Journal of Economics

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“…See e.g Han et al (1993),Helper and Sako (1995),Gadde and Snehota (2000),Liker and Choi (2004)Bernard et al (2019) andTintelnot et al (2019) uses VAT data to study domestic linkages in Belgium. These data provide total annual sales, but do not show individual transactions.…”

mentioning

confidence: 99%

Firm-to-Firm Relationships and the Pass-Through of Shocks: Theory and Evidence

Heise

2019

SSRN Journal

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Economists have long suspected that firm-to-firm relationships might lower the responsiveness of prices to shocks due to the use of fixed-price contracts. Using transaction-level U.S. import data, I show that the pass-through of exchange rate shocks in fact rises as a relationship grows older. Based on novel stylized facts about a relationship's life cycle, I develop a model of relationship dynamics in which a buyer-seller pair accumulates relationship capital to lower production costs under limited commitment. The structurally estimated model generates countercyclical markups and countercyclical pass-through of shocks through variation in the economy's rate of relationship creation, which falls in recessions.

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“…Blaum, Lelarge, and Peters () combine domestic and foreign inputs in a constant elasticity of substitution (CES) function, with elasticity of substitution ɛ ranging between 1.4 and 2.4. Similarly, in Tintelnot, Kikkawa, Mogstad, and Dhyne (), firms use a CES input bundle of workers and domestic and foreign inputs, with elasticity of substitution ρ > 1. The authors use values of ρ ranging from 1.5 to 2.…”

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confidence: 99%

Domestic value chains as stepping stones to global value chain integration

et al. 2019

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Identifying the determinants of global value chain (GVC) integration is essential to understand the past expansion and current slowdown in GVCs. In this paper, we study the role of domestic value chains (DVCs) for GVC integration. In the presence of industry‐specific fixed costs of fragmenting production and of switching across input suppliers, DVCs can either be stepping stones or stumbling blocks for subsequent GVC entry. Focusing on backward linkages, that is, the sourcing of intermediates, we provide robust empirical evidence in favour of the stepping‐stone hypothesis. In our benchmark specification, a one standard deviation increase in DVC integration raises subsequent GVC integration by about 0.4%. To identify the mechanisms at work, we exploit two dimensions of industry‐level heterogeneity: product differentiation (a proxy of fragmentation costs) and relationship specificity (a proxy of the costs of switching between suppliers). We find that DVC integration is less conducive to GVC integration in industries that are characterised by relatively high switching costs and relatively low fragmentation costs.

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Trade and Domestic Production Networks

Cited by 9 publications

References 50 publications

Network-based macro fluctuations: what about an open economy?

Network-based macro fluctuations: what about an open economy?

Firm-to-Firm Relationships and the Pass-Through of Shocks: Theory and Evidence

Domestic value chains as stepping stones to global value chain integration

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