Papers Containing Keywords(s): 'macroeconomic'
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Viewing papers 101 through 110 of 158
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Working PaperThe Margins of U.S. Trade (Long Version)
August 2009
Working Paper Number:
CES-09-18
Recent research in international trade emphasizes the importance of firms extensive margins for understanding overall patterns of trade as well as how firms respond to specific events such as trade liberalization. In this paper, we use detailed U.S. trade statistics to provide a broad overview of how the margins of trade contribute to variation in U.S. imports and exports across trading partners, types of trade (i.e., arm's-length versus related-party) and both short and long time horizons. Among other results, we highlight the differential behavior of related-party and arm's-length trade in response to the 1997 Asian financial crisis.View Full Paper PDF
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Working PaperProducts and Productivity
August 2008
Working Paper Number:
CES-08-22
When firms make decisions about which product to manufacture at a more disaggregated level than observed in the data, measured firm productivity will reflect both true differences in productivity and non-random decisions about which products to manufacture. This paper examines a model of industry equilibrium where firms endogenously sort across products. We use the model to characterize the direction and magnitude of the resulting bias in productivity and to trace the implications for evaluating the aggregate effects of policy reforms such as industry deregulation. The endogenous sorting of firms across products provides a new source of reallocation and leads to biased measures of deregulation's impact on firm and aggregate productivity.View Full Paper PDF
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Working PaperEntry, Exit, and Plant-Level Dynamics over the Business Cycle
June 2008
Working Paper Number:
CES-08-17
This paper analyzes the implications of plant-level dynamics over the business cycle. We first document basic patterns of entry and exit of U.S. manufacturing plants, in terms of employment and productivity, between 1972 and 1997. We show how entry and exit patterns vary during the business cycle, and that the cyclical pattern of entry is very different from the cyclical pattern of exit. Second, we build a general equilibrium model of plant entry, exit, and employment and compare its predictions to the data. In our model, plants enter and exit endogenously, and the size and productivity of entering and exiting plants are also determined endogenously. Finally, we explore the policy implications of the model. Imposing a firing tax that is constant over time can destabilize the economy by causing fluctuations in the entry rate. Entry subsidies are found to be effective in stabilizing the entry rate and output.View Full Paper PDF
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Working PaperRegional Industrial Dominance, Agglomeration Economies, and Manufacturing Plant Productivity
December 2007
Working Paper Number:
CES-07-31
In a seminal article, Benjamin Chinitz (1961) focused attention on the effects that industry size, structure, and economic diversification have on firm performance and regional economies. He also raised a related but conceptually distinct question that has been overlooked since: how does the extent to which a regional industry is concentrated in a single or small number of firms impact the performance of other local firms within that industry? He suggested that such regional industrial dominance may impact input prices, limit capital accessibility, deter entrepreneurial activity, and reduce the regional availability of agglomeration economies such as specialized labor and supply pools In this paper, we use an establishment-level production function to quantify the links between industrial dominance, agglomeration economies, and firm performance. We consider two questions. First, do greater levels of regional industrial dominance lead to lower economic performance by small, dominated manufacturing plants? Second, are small plants in dominated regional industries more limited in capturing regional agglomeration benefits and therefore do they face rigidities in deploying production factors to maximum advantage? Our results suggest that regional industrial organization does influence productivity but that the effect tends to be a direct one, rather than an indirect effect via its influence on agglomeration economies.View Full Paper PDF
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Working PaperCrime's Impact on the Survival Prospects of Young Urban Small Businesses
October 2007
Working Paper Number:
CES-07-30
High prevailing levels of criminal activity have numerous impacts on the viability of urban small businesses and the various impacts are not uniformly negative. It is the negative impacts, however, that are most often noted. Either the perception or reality of rampant crime can scare away customers, potential employees, lending institutions, even casualty insurance underwriters. Yet, competitors may also be driven away. Operating in a high-crime area can be advantageous, on balance, for some firms. Our analysis of nearly 5,000 urban businesses started between 1986 and 1992 indicates that those most seriously impacted by crime exhibit no measureable disadvantage regarding firm size, capitalization, survival rates, or other traits, relative to firms whose owners report that crime has not impacted them negatively.View Full Paper PDF
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Working PaperFirms in International Trade
April 2007
Working Paper Number:
CES-07-14
Standard models of international trade devote little attention to firms. Yet of the 5.5 million firms operating in the United States in 2000, just 4 percent engaged in exporting, and the top 10 percent of these exporting firms accounted for 96 percent of U.S. exports. Since the mid 1990s, a large number of empirical studies have provided a wealth of information about the important role that firms play in mediating countries' imports and exports. This research, based on micro datasets that track countries' production and trade at the firm level, demonstrates that trading firms differ substantially from firms that solely serve the domestic market. Across a wide range of countries and industries, exporters have been shown to be larger, more productive, more skill- and capital-intensive, and to pay higher wages than non-trading firms.2 Furthermore, these differences exist even before exporting begins. The ex ante 'superiority' of exporters suggests self-selection: exporters are more productive, not as a result of exporting, but because only the most productive firms are able to overcome the costs of entering export markets. It is precisely this sort of microeconomic heterogeneity that grants firms the ability to influence macroeconomic outcomes. When trade policy barriers fall or transportation costs decline, high-productivity exporting firms survive and grow while lower-productivity non-exporting firms are more likely to fail. This reallocation of economic activity across firms raises aggregate productivity and provides a new source of welfare gains from trade. Confronting the challenges posed by the analysis of micro data has shifted the focus of the international trade field from countries and industries towards firms and products. We highlight these challenges with a detailed analysis of how trading firms differ from non-trading firms in the United States. We show how these differences serve as the foundation of a series of recent heterogeneous-firm models that offer new insights into the causes and consequences of international trade. We then introduce a new set of stylized facts that emerge from analysis of recently available U.S. customs data. These transaction-level trade data track all of the products imported and exported by the U.S. firms to all of its trading partners from 1992 to 2000. They show that the extensive margins of trade ' that is, the number of products firms trade as well as the number of countries they trade with ' are central to understanding the well-known role of distance in dampening aggregate trade flows. We conclude with suggestions for further theoretical and empirical research.View Full Paper PDF
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Working PaperThe Importance of Reallocations in Cyclical Productivity and Returns to Scale: Evidence from Plant-Level Data
March 2007
Working Paper Number:
CES-07-05
This paper provides new evidence that estimates based on aggregate data will understate the true procyclicality of total factor productivity. I examine plant-level data and show that some industries experience countercyclical reallocations of output shares among firms at different points in the business cycle, so that during recessions, less productive firms produce less of the total output, but during expansions they produce more. These reallocations cause overall productivity to rise during recessions, and do not reflect the actual path of productivity of a representative firm over the course of the business cycle. Such an effect (sometimes called the cleansing effect of recessions) may also bias aggregate estimates of returns to scale and help explain why decreasing returns to scale are found at the industry-level data.View Full Paper PDF
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Working PaperStability and Change in Individual Determinants of Migration: Evidence from 1985-1990 and 1995 to 2000
November 2006
Working Paper Number:
CES-06-27
In this paper, we compare the reliability of migration estimates from two rather different macroeconomic periods in recent U.S. history. One of these periods, 1985-1990 coincides with the culmination of a vast industrial restructuring which saw a significant decline in manufacturing employment. The other period, 1995-2000, encompasses a time of robust economic growth and tight labor markets driven by productivity gains associated with new technologies. Our interest here is in the stability of common individual-level predictors of migration in these rather disparate macroeconomic contexts. Using confidential internal versions of the 1990 and 2000 Census long-form data, we estimate logistic models of the likelihood that individuals will migrate. The geographic detail in the internal Census data permits us to measure migration in ways that are not possible with public-domain Census data on persons. We develop migration definitions that distinguish between local residential mobility likely associated with life course transitions from migration out of the labor market area that may be driven more by employment and other socioeconomic considerations. Using logistic modeling, we find that the same individual attributes predict migration reasonably well during both periods. We also compute some illustrative probabilities of migration that show temporal stability in migration predictors could be lessened by certain changes in population composition.View Full Paper PDF
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Working PaperExplaining Cyclical Movements in Employment: Creative-Destruction or Changes in Utilization?
November 2006
Working Paper Number:
CES-06-25
An important step in understanding why employment fluctuates cyclically is determining the relative importance of cyclical movements in permanent and temporary plant-level employment changes. If movements in permanent employment changes are important, then recessions are times when the destruction of job specific capital picks up and/or investment in new job capital slows. If movements in temporary employment changes are important, then employment fluctuations are related to the temporary movement of workers across activities (e.g. from work to home production or search and back again) as the relative costs/benefits of these activities change. I estimate that in the manufacturing sector temporary employment changes account for approximately 60 percent of the change in employment growth over the cycle. However, if permanent employment changes create and destroy more capital than temporary employment changes, then their economic consequences would be relatively greater. The correlation between gross permanent employment changes and capital intensity across industries supports the hypothesis that permanent employment changes do create and destroy more capital than temporary employment changes.View Full Paper PDF
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Working PaperWhy Are Plant Deaths Countercyclical: Reallocation Timing or Fragility?
November 2006
Working Paper Number:
CES-06-24
Because plant deaths destroy specific capital with large local economic impacts and potentially important macroeconmic effects, understanding the causes of deaths and, in particular, why they are concentrated in cyclical downturns, is important. The reallocationtiming hypothesis posits that plants suffering adverse permanent demand/productivity shocks delay shutdowns until cyclical downturns when plant capacity is less valuable, while the fragility hypothesis posits that shutdowns occur in downturns because the option value of maintaining the plant through low profitability periods is too small. I show that the effect that a plant's specific capital has on the timing of plant deaths differs across these two hypotheses and then use this insight to test the hypotheses' relative importance. I find that fragility is the dominant cause of the countercyclical behavior of plant deaths. This suggests that the endogenous destruction of capital is likely an important amplification and propagation mechanism for cyclical shocks and that stabilization policies have the benefit of reduced capital destruction.View Full Paper PDF
