Essays in International Economics

Local business cycles;Consumer price index;Market entry;Economics;Business and Economics;Public Policy & Economics

Gilbert, LaurienCravino, Javier ;

University of Michigan

关键词: Local business cycles;    Consumer price index;    Market entry;    Economics;    Business and Economics;    Public Policy & Economics;   

Others  :  https://deepblue.lib.umich.edu/bitstream/handle/2027.42/145945/legilb_1.pdf?sequence=1&isAllowed=y

瑞士|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

The dissertation consists of two essays. The first considers product entry as a channel for business cycle propagation. Net product entry is procyclical, which amplifies fluctuations in consumer welfare over the cycle if consumers have love for variety. Using barcode-level data covering grocery expenditures in 26 major cities, I establish that differences in city-level product entry are largely uncorrelated with local economic conditions. I provide evidence that city-level changes in product variety over the business cycle are driven instead by multi-city retailers who introduce new products simultaneously in all cities in which they operate. This suggests that product introduction by multi-city retailers can propagate business cycle shocks. To quantify the impact of this mechanism, I develop a quantitative model of retailer product choice that relates the welfare gains from product entry in each city to demand growth in every other city. The model implies that the contribution of other cities;; business cycle shocks to each city’s price level is proportional to the share of other cities in retailer revenue. Since the share of outside cities in retailer revenue is 63 percent in the average city, the impact of other cities;; shocks on product entry is substantial. The presence of multi-city retailers makes net product entry more correlated across cities than they would be if retailers operated in only one city. In a counterfactual in which retailers do operate in only one city, the variation in gains from new product entry across cities would be 47 percent higher than in the baseline.The second essay focuses on the entry behavior of new exporting firms. New exporters take a few years to catch up to the average total sales of all exporters. Using Colombian export data from 2007-2012, I show that the slow catchup of new exporters is the result of low market participation and sequential market entry (the extensive margin), rather than low sales in individual foreign markets (the intensive margin). Motivated by my empirical findings, I develop a quantitative model in which firms enter markets sequentially, in order of decreasing profitability. I use this model to calculate the benefit from a policy designed to reduce bilateral entry costs and show that as the result of fixed costs that depend on export experience, trade promotion in one market may provide significant increases in exports to markets not targeted by the policy.