NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Nicholas Sly

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Working Papers

September 2012Cherries for Sale: Export Networks and the Incidence of Cross-Border M&A
with Bruce A. Blonigen, Lionel Fontagné, Farid Toubal: w18414
This paper develops a dynamic model of cross-border M&A activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels several years prior to acquisition, but then suffered a negative productivity shock (i.e., cherries for sale). With high ex ante productivity levels, target firms are able to invest in large export networks that are valuable to foreign multinationals because of locational differences and trade costs. Subsequently, domestic firms that experience reductions in productivity no longer find their established network as valuable to serve independently, increasing the surplus generated by a foreign acquisition. From the theory we derive a dynamic panel binary choice empirical model that uses predetermine...
May 2012Comovement in GDP Trends and Cycles Among Trading Partners
with Bruce A. Blonigen, Jeremy Piger: w18032

“Comovement in GDP Trends and Cycles among Trading Partners” with Bruce Blonigen and Nicholas Sly, Journal of International Economics, forthcoming.

It has long been recognized that business cycle comovement is greater between countries that trade intensively with one another. Surprisingly, no one has previously examined the relationship between trade intensity and comovement of shocks to the trend level of output. Contrary to the result for cyclical fluctuations, we find that comovement of shocks to trend levels of real GDP is significantly weaker among countries that trade intensively with one another. We also find that the influence of trade on comovement between shocks to trends has remained stable, or become stronger in recent decades, while the role of trade in generating cyclical comovement has diminished steadily over time. In short, we find that international trade relationships have a substantial impact on comovement of shock...
October 2011Separating the Opposing Effects of Bilateral Tax Treaties
with Bruce A. Blonigen, Lindsay Oldenski: w17480

Forthcoming: Separating the Opposing Effects of Bilateral Tax Treaties, Bruce A. Blonigen, Lindsay Oldenski, Nicholas Sly. in Trans-Atlantic Public Economics Seminar, Devereux and Gordon. 2014

Bilateral tax treaties (BTT) are intended to promote foreign direct investment and foreign affiliate activity through double taxation relief. However, BTTs also typically contain provisions that facilitate sharing of tax information between countries intended to curtail tax avoidance by multinational firms. These provisions should disproportionately affect firms that intensively use inputs for which an arms-length price is easily observed, since strategic transfer practices that manipulate tax liabilities are no longer effective with information sharing between countries. Using BEA firm-level data we are able to separately estimate the impacts of double-taxation relief and sharing of tax information on investment behavior of US multinational firms. We find a significant positive effect of...

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