Frictions and adjustments in firm-to-firm trade
We study bilateral trade adjustments in a dynamic Ricardian model of trade with search frictions. The model generates an endogenous network of firm-to-firm trade re- lationships that displays price bargaining within and across firm-to-firm relationships. Following a foreign shock, firms sourcing inputs from the country have three options: Ab- sorb the shock, renegotiate with their current supplier or switch to a supplier in another country. The relative importance of these adjustment margins depends on the interplay between the Ricardian comparative advantages, search frictions and firms’ individual char- acteristics, including the history of the relationship. We exploit French firm-to-firm trade data to estimate the model structurally and quantify the relative importance of these adjustment margins in 26 sectors and 14 EU countries.
Date:
29 November 2022, 13:15 (Tuesday, 8th week, Michaelmas 2022)
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room G
Speaker:
Isabelle Mejean (Science Po)
Organising department:
Department of Economics
Part of:
Macroeconomics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Melis Clark
