The Gains from Input Trade in Firm-Based Models of Importing / Joaquin Blaum, Claire LeLarge, Michael Peters.

Format:

Book

Author/Creator:

Blaum, Joaquin.

Contributor:

National Bureau of Economic Research.

LeLarge, Claire.

Peters, Michael.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21504.

NBER working paper series no. w21504

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Trade in intermediate inputs allows firms to lower their costs of production by using better, cheaper, or novel inputs from abroad. Quantifying the aggregate impact of input trade, however, is challenging. As importing firms differ markedly in how much they buy in foreign markets, results based on aggregate models do not apply. We develop a methodology to quantify the gains from input trade for a class of firm-based models of importing. We derive a sufficiency result: the change in consumer prices induced by input trade is fully determined from the joint distribution of value added and domestic expenditure shares in material spending across firms. We provide a simple formula that can be readily evaluated given the micro-data. In an application to French data, we find that consumer prices of manufacturing products would be 27% higher in the absence of input trade.

Notes:

Print version record

August 2015.