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On the Duration of Trade

  • Tibor Besedes
  • Thomas J. Prusa

This paper employs survival analysis to study the duration of US imports. We find that the median duration of exporting a product to the US is very short, on the order to two to four years. Our results also indicate that there is negative duration dependence meaning that if a country is able to survive in the exporting market for the first few years it will face a very small probability of failure and will export the product for a long period of time. This result holds across countries and industries. We find that our results are not only robust to aggregation but are strengthened by aggregation. That is, as we aggregate from product level trade data to SITC industry level trade data the estimated survival increases. We rank countries by their survival experience and show that our rankings are strongly correlated with the rankings in Feenstra and Rose (2002), implying that product cycle followers also experience particularly short duration.

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File URL: http://www.nber.org/papers/w9936.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9936.

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Date of creation: Sep 2003
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Publication status: published as Besedes, Tibor and Thomas J. Prusa. "Ins, Outs, And The Duration Of Trade," Canadian Journal of Economics, 2006, v39(1,Feb), 266-295.
Handle: RePEc:nbr:nberwo:9936
Note: ITI
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  1. Robert C. Feenstra & Andrew K. Rose, 2000. "Putting Things In Order: Trade Dynamics And Product Cycles," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 369-382, August.
  2. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier.
  3. Pakes, A. & Ericson, R., 1990. "Empirical Implications Of Alternative Models Of Firm Dynamics," Papers 594, Yale - Economic Growth Center.
  4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  5. Redding, Stephen, 2002. "Specialization dynamics," Journal of International Economics, Elsevier, vol. 58(2), pages 299-334, December.
  6. Marcus Asplund & Volker Nocke, 2003. "Firm Turnover in Imperfectly Competitive Markets," PIER Working Paper Archive 03-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. James E. Rauch, 1996. "Networks versus Markets in International Trade," NBER Working Papers 5617, National Bureau of Economic Research, Inc.
  8. Peter K. Schott, 2001. "Do Countries Specialize?," Yale School of Management Working Papers ysm173, Yale School of Management.
  9. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
  10. Gagnon, Joseph E & Rose, Andrew K, 1995. "Dynamic Persistence of Industry Trade Balances: How Pervasive Is the Product Cycle?," Oxford Economic Papers, Oxford University Press, vol. 47(2), pages 229-48, April.
  11. Proudman, James & Redding, Stephen J., 1998. "Persistence and Mobility in International Trade," CEPR Discussion Papers 1802, C.E.P.R. Discussion Papers.
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