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The Impact of Demand Shocks on Firm-Level Offshoring Behavior: Theory and Evidence

Listed author(s):
  • Tan, Yong
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This paper extends the model of Antras et al.(2014) to disentangle the link between demand shocks and firm-level offshoring decisions. The model predicts that a positive demand shock increases the firm-level purchases of imported intermediates in both the extensive and intensive margins. Using a difference-in-difference approach, we examine the response of Chinese exporters to a quota removal on textile and clothing products, which is equivalent to a positive demand shock. The findings indicate that firms import more varieties and higher volumes of intermediates after the quota removal. The results are robust to different regression designs.

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File URL: https://mpra.ub.uni-muenchen.de/73734/1/MPRA_paper_73734.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 73734.

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Date of creation: Jan 2016
Handle: RePEc:pra:mprapa:73734
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  1. Volker Nocke & Stephen Yeaple, 2014. "Globalization And Multiproduct Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 993-1018, November.
  2. Kalina Manova & Zhiwei Zhang, 2012. "Multi-Product Firms and Product Quality," NBER Working Papers 18637, National Bureau of Economic Research, Inc.
  3. Amit K. Khandelwal & Peter K. Schott & Shang-Jin Wei, 2013. "Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters," American Economic Review, American Economic Association, vol. 103(6), pages 2169-2195, October.
  4. Rotunno, Lorenzo & Vézina, Pierre-Louis & Wang, Zheng, 2013. "The rise and fall of (Chinese) African apparel exports," Journal of Development Economics, Elsevier, vol. 105(C), pages 152-163.
  5. Pol Antràs & Teresa C. Fort & Felix Tintelnot, 2014. "The Margins of Global Sourcing: Theory and Evidence from U.S. Firms," NBER Working Papers 20772, National Bureau of Economic Research, Inc.
  6. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
  7. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1271-1318.
  8. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
  9. Pol Antràs & Robert W. Staiger, 2012. "Offshoring and the Role of Trade Agreements," American Economic Review, American Economic Association, vol. 102(7), pages 3140-3183, December.
  10. Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May.
  11. Yukiko Saito & Andreas Moxnes & Andrew Bernard, 2015. "Production Networks, Geography and Firm Performance," 2015 Meeting Papers 311, Society for Economic Dynamics.
  12. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  13. Kunal Dasgupta & Jordi Mondria, 2014. "Inattentive Importers," Working Papers tecipa-512, University of Toronto, Department of Economics.
  14. Bergin, Paul R. & Feenstra, Robert C. & Hanson, Gordon H., 2011. "Volatility due to offshoring: Theory and evidence," Journal of International Economics, Elsevier, vol. 85(2), pages 163-173.
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