Department of Economics
NBER Working Papers and Publications
|May 2015||How You Export Matters: Export Mode, Learning and Productivity in China|
with Xue Bai, Kala Krishna: w21164
This paper shows that how firms export (directly or indirectly via intermediaries) matters. We develop and estimate a dynamic discrete choice model that allows learning-by-exporting on the cost and demand side as well as sunk/fixed costs to differ by export mode. We find that demand and productivity evolve more favorably under direct exporting, though the fixed/sunk costs of this option are higher. Our results suggest that had China not liberalized its direct trading rights when it joined the WTO, its exports and export participation would have been 30 and 37 percent lower respectively.
Published: Bai, Xue & Krishna, Kala & Ma, Hong, 2017. "How you export matters: Export mode, learning and productivity in China," Journal of International Economics, Elsevier, vol. 104(C), pages 122-137. citation courtesy of
|January 2012||Contractual Versus Non-Contractual Trade: The Role of Institutions in China|
with Robert C. Feenstra, Chang Hong, Barbara J. Spencer: w17728
Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in China, and export data that distinguishes between foreign and domestic exporters and processing versus ordinary trade, to show that institutional quality is a significant factor in determining Chinese provincial export patterns. Institutions matter more for processing trade, and more for foreign firms, just as we would expect from a greater reliance on contracts in these cases.
Published: Feenstra, Robert C. & Hong, Chang & Ma, Hong & Spencer, Barbara J., 2013. "Contractual versus non-contractual trade: The role of institutions in China," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 281-294. citation courtesy of
|Who Shrunk China? Puzzles in the Measurement of Real GDP|
with Robert C. Feenstra, J. Peter Neary, D.S. Prasada Rao: w17729
The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.
Published: Robert C. Feenstra & Hong Ma & J. Peter Neary & D.S. Prasada Rao, 2013. "Who Shrunk China? Puzzles in the Measurement of Real GDP," Economic Journal, Royal Economic Society, vol. 123(12), pages 1100-1129, December. citation courtesy of
|December 2007||Optimal Choice of Product Scope for Multiproduct Firms under Monopolistic Competition|
with Robert Feenstra: w13703
In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of "cannibalizing" their own sales. With identical costs across firms, opening trade leads to fewer firms surviving in each country but more varieties produced by each of those firms. With heterogeneous costs, the number of firms surviving in equilibrium is quite insensitive to the market size. When trade is opened, more firms initially enter, but the larger market size reduces the cannibalization effect and expands the optimal scope of products. As a result, the less efficient firms exit, and the larger market i...
Published: “Optimal Choice of Product Scope for Multiproduct Firms under Monopolistic Competition,” E. Helpman, D. Marin and T. Verdier, eds., The Organization of Firms in a Global Economy , Harvard University Press, 2009, 173-199, with Hong Ma.