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Firm Export Dynamics in Interdependent Markets

Author

Listed:
  • Alonso Alfaro-Ureña

    (Banco Central de Costa Rica and Universidad de Costa Rica)

  • Juanma Castro-Vincenzi

    (Harvard University)

  • Sebastián Fanelli

    (CEMFI)

  • Eduardo Morales

    (Princeton University)

Abstract

We estimate a model of firm export dynamics featuring cross-country complementarities. The firm decides where to export by solving a dynamic combinatorial discrete choice problem, for which we develop a solution algorithm that overcomes the computational challenges inherent to the large dimensionality of its state space and choice set. According to our estimated model, firms enjoy cost reductions when exporting to countries geographically or linguistically close to each other, or that share deep trade agreements; and countries, especially small ones, sharing these traits with attractive destinations receive significantly more exports than in the absence of complementarities.

Suggested Citation

  • Alonso Alfaro-Ureña & Juanma Castro-Vincenzi & Sebastián Fanelli & Eduardo Morales, 2023. "Firm Export Dynamics in Interdependent Markets," Working Papers 2023-18, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2023-18
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    More about this item

    Keywords

    export dynamics; integer programming problem; deep free trade agreements;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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