NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Joaquin Blaum

64 Waterman Street
Box B, Brown University
Providence, RI 02912

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Institutional Affiliation: Brown University

NBER Working Papers and Publications

August 2015The Gains from Input Trade in Firm-Based Models of Importing
with Claire LeLarge, Michael Peters: w21504
Trade in intermediate inputs allows firms to lower their costs of production by using better, cheaper, or novel inputs from abroad. Quantifying the aggregate impact of input trade, however, is challenging. As importing firms differ markedly in how much they buy in foreign markets, results based on aggregate models do not apply. We develop a methodology to quantify the gains from input trade for a class of firm-based models of importing. We derive a sufficiency result: the change in consumer prices induced by input trade is fully determined from the joint distribution of value added and domestic expenditure shares in material spending across firms. We provide a simple formula that can be readily evaluated given the micro-data. In an application to French data, we find that consumer prices o...
 
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