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Imported Inputs and Productivity

Listed author(s):
  • László Halpern
  • Miklós Koren
  • Adam Szeidl

We estimate a model of importers in Hungarian microdata and conduct counterfactual analysis to investigate the effect of imported inputs on productivity. We find that importing all input varieties would increase a firm's revenue productivity by 22 percent, about one-half of which is due to imperfect substitution between foreign and domestic inputs. Foreign firms use imports more effectively and pay lower fixed import costs. We attribute one-quarter of Hungarian productivity growth during the 1993-2002 period to imported inputs. Simulations show that the productivity gain from a tariff cut is larger when the economy has many importers and many foreign firms. (JEL D24, F13, F14, L60)

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 105 (2015)
Issue (Month): 12 (December)
Pages: 3660-3703

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Handle: RePEc:aea:aecrev:v:105:y:2015:i:12:p:3660-3703
Note: DOI: 10.1257/aer.20150443
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