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Temporary trade and heterogeneous firms

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  • Gábor Békés
  • Balázs Muraközy

Abstract

Using Hungarian firm-level export data, we show that about one third of firm-destination and about one half of firm-product-destination export spells are short-lived, or temporary, in each year. This is inconsistent with theories where comparative advantage is stable and market entry costs are sunk. We show how endogenous choice between variable and sunk cost trade technologies can explain the empirical importance and some characteristics of temporary trade. We build a simple model in which the likelihood of temporary trade, defined by a simple filter, depends on productivity and capital cost of the firm as well as well known gravity variables of destinations. These predictions are borne out by the data; the likelihood of temporary trade rises with lower productivity, higher capital cost of the firm, further location and larger GDP of destination countries.

Suggested Citation

  • Gábor Békés & Balázs Muraközy, 2011. "Temporary trade and heterogeneous firms," CeFiG Working Papers 6, Center for Firms in the Global Economy, revised 13 Feb 2011.
  • Handle: RePEc:cfg:cfigwp:6
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    File URL: http://www.cepr.org/meets/wkcn/2/2433/papers/MurakozyFinal-P.pdf
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    File URL: http://dx.doi.org/10.1016/j.jinteco.2011.12.007
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    Cited by:

    1. Aeberhardt, Romain & Buono, Ines & Fadinger, Harald, 2014. "Learning, incomplete contracts and export dynamics: Theory and evidence from French firms," European Economic Review, Elsevier, vol. 68(C), pages 219-249.
    2. Dick Nuwamanya Kamuganga, 2012. "The Linkage between Outcome Differences in Cotton Production and Rural Roads Improvements - A Matching Approach," IHEID Working Papers 15-2012, Economics Section, The Graduate Institute of International Studies.
    3. Kurz, Christopher & Senses, Mine Z., 2016. "Importing, exporting, and firm-level employment volatility," Journal of International Economics, Elsevier, vol. 98(C), pages 160-175.
    4. Kropf, Andreas & Sauré, Philip, 2014. "Fixed costs per shipment," Journal of International Economics, Elsevier, vol. 92(1), pages 166-184.
    5. Ingo Geishecker & Philipp J.H. Schröder & Allan Sørensen, 2016. "One-off Export Events," CESifo Working Paper Series 6207, CESifo Group Munich.
    6. Csaba, László, 2013. "Kérdőjelek a közgazdaságtanban és oktatásában
      [Challenges in economic research and education]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 47-63.
    7. Tomohiko Inui & Keiko Ito & Daisuke Miyakawa, 2017. "Export Experience, Product Differentiation and Firm Survival in Export Markets," The Japanese Economic Review, Japanese Economic Association, vol. 68(2), pages 217-231, June.
    8. Joakim Gullstrand & Maria Persson, 2015. "How to combine high sunk costs of exporting and low export survival," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(1), pages 23-51, February.
    9. Mion, Giordano & Opromolla, Luca David & Sforza, Alessandro, 2016. "The diffusion of knowledge via managers’ mobility," LSE Research Online Documents on Economics 69035, London School of Economics and Political Science, LSE Library.
    10. repec:eee:jjieco:v:45:y:2017:i:c:p:1-12 is not listed on IDEAS
    11. Roberto Ramos & Enrique Moral-Benito, 2013. "Agglomeration matters for trade," Working Papers 1316, Banco de España;Working Papers Homepage.
    12. Mion, Giordano & Opromolla, Luca David, 2014. "Managers' mobility, trade performance, and wages," Journal of International Economics, Elsevier, vol. 94(1), pages 85-101.
    13. Békés, Gábor & Halpern, László & Muraközy, Balázs, 2013. "Külkereskedelem és a vállalatok közötti különbségek
      [Heterogeneous firms and foreign trade]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 1-24.
    14. Wagner, Joachim, 2015. "Trade Dynamics and Trade Costs: First Evidence from the Exporter and Importer Dynamics Database for Germany," Working Paper Series in Economics and Institutions of Innovation 423, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    15. Hayakawa, Kazunobu & Ito, Tadashi & Okubo, Toshihiro, 2017. "On the stability of intra-industry trade," Journal of the Japanese and International Economies, Elsevier, vol. 45(C), pages 1-12.
    16. Straume, Hans-Martin & Asche, Frank, 2015. "Duration and temporary trade," Working Papers in Economics 04/15, University of Bergen, Department of Economics.

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    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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