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Trade and Domestic Production Networks

Author

Listed:
  • Magne Mogstad

    (University of Chicago)

  • Emmanuel Dhyne

    (National Bank of Belgium)

  • Ayumu Kikkawa

    (University of Chicago)

  • Felix Tintelnot

    (University of Chicago)

Abstract

In this paper we study how international trade affects firm efficiency and real wages in Belgium. Both in our theory and observed data firms trade with each other and external shocks transmit along the firm-to-firm production network. We first document the transmission of external trade shocks in reduced-form equations based on an exogenous network structure. We then develop and estimate a model of firm-to-firm trade, external trade, and endogenous network formation.

Suggested Citation

  • Magne Mogstad & Emmanuel Dhyne & Ayumu Kikkawa & Felix Tintelnot, 2017. "Trade and Domestic Production Networks," 2017 Meeting Papers 381, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:381
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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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