The Few Leading the Many: Foreign Affiliates and Business Cycle Comovement

Kleinert, Joern; Martin, Julien; Toubal, Farid

doi:10.24149/gwp116

Cited by 9 publications

(10 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Other research appears to confirm the role of multinationals in business cycle comovement: Using the regional dispersion of multinationals within France, Kleinert, Martin, and Toubal (2012) find a positive correlation with regional GDP comovement with the origin of multinationals in that region. They also find a high share of import shipments for these multinational affiliates.…”

Section: Introductionmentioning

confidence: 81%

Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake

Boehm

Flaaen

Pandalai-Nayar

2019

The Review of Economics and Statistics

425

131

View full text Add to dashboard Cite

PRELIMINARY AbstractUsing novel firm-level microdata and leveraging a natural experiment, this paper provides causal evidence for the role of trade and multinational firms in the crosscountry transmission of shocks. Foreign multinational affiliates in the U.S. exhibit substantial intermediate input linkages with their source country. The scope for these linkages to generate cross-country spillovers in the domestic market depends on the elasticity of substitution with respect to other inputs. Using the 2011 Tōhoku earthquake as an exogenous shock, we estimate this elasticity for those firms most reliant on Japanese imported inputs: the U.S. affiliates of Japanese multinationals. These firms suffer large drops in U.S. output in the months following the shock, roughly proportional to the drop in imports and consistent with a Leontief relationship between imported and domestic inputs. Structural estimates of the production function for these firms yield disaggregated production elasticities that are similarly low. Our estimates suggest that global supply chains are sufficiently rigid to play an important role in the cross-country transmission of shocks.JEL Codes: F10, F23, F44, E32

show abstract

Section: Introductionmentioning

confidence: 81%

Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake

Boehm

Flaaen

Pandalai-Nayar

2019

The Review of Economics and Statistics

425

131

View full text Add to dashboard Cite

show abstract

“…Following Kleinert et al (2015), we consolidate the information on domestic activities, exports and foreign affiliates to the level of the French group (i.e., if firms A and B belong to firm C, we consolidate all three firms). We keep a consolidated firm in the sample if at least one of its domestic members is active in the manufacturing sector in at least one year.…”

Section: Datamentioning

confidence: 99%

The Life-Cycle Dynamics of Exporters and Multinational Firms

Gumpert¹,

Li²,

Moxnes³

et al. 2017

View full text Add to dashboard Cite

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. We present a dynamic model of trade and MNE activity in which the mode of serving a market depends on the well-known proximity-concentration tradeoff. We show that the option of performing MNE activities in the model produces life-cycle patterns for exporters that differ from those in an export-only model. Calibrating our model to rich firm-level data from France and Norway, our main quantitative finding is that a reduction in trade costs triggers much larger responses in growth rates and exit rates, for young exporters, in the model with MNEs than in the model without MNEs. We also show that the model is largely consistent with a set of new facts on the joint life-cycle dynamic behavior of exporters and MNEs. Terms of use: Documents inJEL-Codes: F100, F200.

show abstract

“…This approach relates our paper to a recent literature on the organization of production along the value chain (e.g., Antràs and Chor 2013;Costinot et al 2013), because using weights on input-output dependence allows us to draw conclusions about the relative position (upstream or downstream) of entities (and countries) in the global value chain. Moreover, the approach is related to the literature unveiling vertical international linkages in the productivity (see Bernstein and Mohnen 1997;Keller 2002;Morrison Paul and Siegel 1999;Smarzynska Javorcik 2004), growth and volatility (Burstein et al 2008;Kleinert et al 2012;Oberhofer and Pfaffermayr 2013), and, hence, the profitability across units (firms, sectors, and even countries). Comparing input-output-related interdependencies of affiliates' investments to geographic-distance-related interdependencies also permits drawing conclusions about the relative importance of different channels of interdependence.…”

Section: Introductionmentioning

confidence: 99%

Measuring the Interdependence of Multinational Firms' Foreign Investments

et al. 2017

View full text Add to dashboard Cite

Earlier work found evidence for geographic linkages of aggregate foreign direct investment across countries and country‐pairs. From a theoretical point of view, such linkages at the macroeconomic level may root in between‐firm as well as within‐firm linkages and originate from information spillovers across or within firms in exploring unknown markets, and vertical linkages between production plants across different locations within the firm. We use data on the universe of German multinational enterprises (MNEs) to empirically explore how marginal investments at one foreign affiliate depend on investments at other affiliates within the same MNE. The empirical approach employs two channels or modes of cross‐affiliate interdependence: mere geography (capturing horizontal linkages through correlated learning and horizontal competition within the firm) and input–output relationships within or across industries (which capture vertical linkages). Adding to earlier findings at the aggregate level, we find evidence of a significant interdependence of investments within the firm. In the firm‐level data at hand, vertical linkages appear to be more important than horizontal ones. Investments at one location tend to stimulate investments at other locations of the same MNE, particularly if input linkages are strong. The opposite seems to be true for output linkages. Beyond vertical linkages, mere geographic proximity matters only to a minor extent. This suggests that evidence of linkages through geographic closeness at aggregate data levels accrue mainly to reasons of vertical linkages within networks of affiliates. (JEL C31, D22, F21, F23, F68, G31, H32)

show abstract

The Few Leading the Many: Foreign Affiliates and Business Cycle Comovement

Cited by 9 publications

References 22 publications

Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake

Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake

The Life-Cycle Dynamics of Exporters and Multinational Firms

Measuring the Interdependence of Multinational Firms' Foreign Investments

Contact Info

Product

Resources

About