Extended Gravity

Morales, Eduardo; Sheu, Gloria; Zahler, Andrés

doi:10.1093/restud/rdz007

Cited by 117 publications

(76 citation statements)

References 65 publications

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“…Another important caveat with the evidence above is that it is based on gravity‐style specifications that, strictly speaking, are inconsistent with our theoretical framework. Specifically, in Section , we will show that bilateral trade flows will typically be affected by trade costs associated with third countries (see Morales, Sheu, and Zahler (), and Adao, Costinot, and Donaldson () for recent evidence of these third‐market effects).…”

Section: Characterization Of the Equilibriummentioning

confidence: 97%

On the Geography of Global Value Chains

Antràs

Gortari²

2020

ECTA

191

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This paper develops a multi‐stage general‐equilibrium model of global value chains (GVCs) and studies the specialization of countries within GVCs in a world with barriers to international trade. With costly trade, the optimal location of production of a given stage in a GVC is not only a function of the marginal cost at which that stage can be produced in a given country, but is also shaped by the proximity of that location to the precedent and the subsequent desired locations of production. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central locations. We also develop and estimate a tractable, quantifiable version of our model that illustrates how changes in trade costs affect the extent to which various countries participate in domestic, regional, or global value chains, and traces the real income consequences of these changes.

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Section: Characterization Of the Equilibriummentioning

confidence: 97%

On the Geography of Global Value Chains

Antràs

Gortari²

2020

ECTA

191

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“…Strictly speaking, Lemma 1 implies that E[e V ajmt |z mt ] = 0 while condition (iii) of Assumption 3 requires E e V ajmt |z mt = 0, where e V ajmt includes e V ajmt as well as potentially e V ajm,t+d terms with d ≥ 1. As discussed in the proof of Lemma 1, an instrument z mt in the time-t information set will also be uncorrelated with future expectational error terms.26 Endogeneity problems due to expectational errors are also a central concern inDickstein and Morales (2018) andMorales, Sheu, and Zahler (2019). They construct discrete-choice analogues of Euler equations by comparing observed choice paths and paths involving one-period deviation in models with one-period finite dependence.…”

mentioning

confidence: 99%

Linear IV regression estimators for structural dynamic discrete choice models

Kalouptsidi

Scott

Souza-Rodrigues

2021

Journal of Econometrics

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In structural dynamic discrete choice models, unobserved or mis-measured state variables may lead to biased parameter estimates and misleading inference. In this paper, we show that instrumental variables can address such measurement problems when they relate to state variables that evolve exogenously from the perspective of individual agents (i.e., market-level states). We define a class of linear instrumental variables estimators that rely on Euler equations expressed in terms of conditional choice probabilities (ECCP estimators). These estimators do not require observing or modeling the agent's entire information set, nor solving or simulating a dynamic program. As such, they are simple to implement and computationally light. We provide constructive arguments for the identification of model primitives, and establish the estimator's consistency and asymptotic normality. Four applied examples serve to illustrate the ECCP approach's implementation, advantages, and limitations: dynamic demand for durable goods, agricultural land use change, technology adoption, and dynamic labor supply. We illustrate the estimator's good finite-sample performance in a Monte Carlo study, and we estimate a labor supply model empirically for taxi drivers in New York City.

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“…Many studies on the export decision making of firms focus on the impact of export behavior. One of the most common views emphasizes the positive role of prior export activity and believes that exporters can learn from their previous experience in exporting and predict unknown markets demand to decide whether to export, which facilitates their access to new markets more easily and increases their export capacity (Arkolakis, 2010; Fafchamps, El Hamine, & Zeufack, 2008; Morales, Sheu, & Zahler, 2018). However, from another perspective, the export activities do not only mean experience for exporters, but also imply sunk cost (Padmaja & Sasidharan, 2017).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Nontariff measures, trade deflection, and market expansion of exporters in China

2020

Growth and Change

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This study focuses on the influence of Nontariff Measures (NTMs) on market expansion of exporters using the Chinese custom database during 2003–2011. Besides confirming the negative effect of prior export activity and positive effect of neighboring spillovers, this paper finds robust negative effects of NTMs on entry of new markets at the firm‐market level. The empirical results show that a trade deflection effect exists at the microscale and prefers the markets with lower degree of NTMs. Furthermore, exporters with fewer trade links or in processing trade seem lacking in ability to channel new markets under the pressure of NTMs in their existing markets.

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Extended Gravity

Cited by 117 publications

References 65 publications

On the Geography of Global Value Chains

On the Geography of Global Value Chains

Linear IV regression estimators for structural dynamic discrete choice models

Nontariff measures, trade deflection, and market expansion of exporters in China

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