School of Finance
Shanghai University of Finance and Economics
777 Guoding Road, Shanghai, China, 200433
NBER Working Papers and Publications
|April 2018||Financial Frictions and Trade Dynamics|
with Paul Bergin, Ching-Yi Lin: w24503
This paper demonstrates theoretically that a financial shock can have very persistent effects on international trade. Motivation is taken from the aftermath of the dramatic trade collapse in 2008-9, which despite a substantial recovery, has left a persistently slower growth rate in trade. We find conditions under which a transitory financial shock significantly reduces the investment by firms in entering the export market, and that this can have long-lasting effects on the range of goods exported and hence overall trade. Important to our mechanism are endogenous capital structure decisions by firms in response to the financial shock, and firm entry investment that requires traded goods. This mechanism provides an example of how firm dynamics can serve as a potent propagation mechanism, gen...
|February 2016||Trade Policy Uncertainty and Exports: Evidence from China’s WTO Accession|
with Zhiyuan Li, Deborah L. Swenson: w21985
This paper studies how reduction in trade policy uncertainty affects firm export decisions. Using a firm-product level dataset on Chinese exports to the United States and the European Union in the years surrounding China’s WTO accession, we provide strong evidence that reduction in trade policy uncertainty simultaneously induced firm entries to and firm exits from export activity within fine product-level markets. In addition, we uncover accompanying changes in export product prices and quality that coincided with this reallocation: firms that provided higher quality products at lower prices entered the export market, while firms that had higher prices and provided lower quality products prior to the changes, exited. To explain the simultaneous export entries and exits, as well as the chan...
Published: Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2017. "Trade policy uncertainty and exports: Evidence from China's WTO accession," Journal of International Economics, vol 106, pages 20-36. citation courtesy of
|May 2014||Financial Frictions and Firm Dynamics|
with Paul Bergin, Ching-Yi Lin: w20099
Firm entry dynamics are an integral part of the propagation of financial shocks to the real economy. A VAR documents that adverse financial shocks in the U.S. postwar period are associated with a fall in new firm creation and a fall in firm equity values. We propose a DSGE model with endogenous firm entry and financial frictions that is able to explain these facts. The model is novel in giving firms a choice of financing up-front entry costs through a combination of debt as well as equity, so that financial shocks directly impact the financing of firm entry. The model is also novel in making use of the asset pricing implications of the firm entry condition to explain the equity price response to a financial shock. The model indicates that free entry of new firms limits the ability of incum...
|July 2012||The Connection between Imported Intermediate Inputs and Exports: Evidence from Chinese Firms|
with Zhiyuan Li, Deborah L. Swenson: w18260
We use data on Chinese manufacturing firms to study the connection between individual firm imports and firm export outcomes. Since our panel covers the years 2002 to 2006, we can use changes in import tariffs associated with China's WTO entry as instruments. Our regression results show that firms that expanded their intermediate input imports expanded the volume of their exports and increased their export scope, though the magnitude of the effects differed by import source, firm organizational form, and industry R&D intensity. On these dimensions, we find that imported intermediate inputs from OECD rather than non-OECD countries generated larger firm export improvements, that private Chinese firms derived larger benefits from imported inputs than did foreign invested firms, and that imp...
Published: Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2016. "The connection between imported intermediate inputs and exports: Evidence from Chinese firms," Journal of International Economics, vol 101, pages 86-101. citation courtesy of