Felix Tintelnot, University of Chicago
Abstract: In this paper we study how international trade affects firm efficiency and real wages. Both in our theory and in the Belgian data, firms trade with each other, and external shocks transmit along the firm-to-firm production network. We first document that the exposure to foreign inputs is much larger when network effects are taken into account compared to a standard analysis in which only direct importing or a common intermediate good is considered. We then develop and estimate a tractable model of domestic firm-to-firm trade, external trade, and endogenous network formation. Finally, we study the transmission of a foreign trade shock through the Belgian economy.
The International Economics Seminar series is presented jointly with the Walsh School of Foreign Service and the Economics Department of Georgetown University.