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The Cross Sectional Dynamics of Heterogenous Trade Models

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  • Luca David Opromolla
  • Alfonso A. Irarrazabal

Abstract

In this paper we propose a framework for studying export dynamics and market specific flows in a multicountry model of trade with heterogenous firms.Countries are asymmetric in terms of their size, the size distribution of potential entrants, properties of firms idiosyncratic shocks, and trade barriers. The model has predictions in terms of cross-sectional moments and exporters dynamics. We show that persistent productivity shocks are enough to account for, qualitatively, many features of the data. In particular, the model is consistent with observed patterns of entry and exit across markets, export sales distribution, and the life cycle of new exporters.

Suggested Citation

  • Luca David Opromolla & Alfonso A. Irarrazabal, 2009. "The Cross Sectional Dynamics of Heterogenous Trade Models," Working Papers w200924, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w200924
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    References listed on IDEAS

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    4. Luca David Opromolla & Alfonso A. Irarrazabal, 2008. "A Theory of Entry and Exit into Exports Markets," Working Papers w200820, Banco de Portugal, Economics and Research Department.
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    7. John Sutton, 2001. "The Variance of Firm Growth Rates: The Scaling Puzzle," STICERD - Economics of Industry Papers 27, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    8. Alfonso Irarrazabal & Andreas Moxnes & Luca David Opromolla, 2013. "The Margins of Multinational Production and the Role of Intrafirm Trade," Journal of Political Economy, University of Chicago Press, vol. 121(1), pages 74-126.
    9. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1271-1318.
    10. Costas Arkolakis, 2010. "Market Penetration Costs and the New Consumers Margin in International Trade," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1151-1199.
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    14. repec:hal:spmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
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    Cited by:

    1. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, vol. 88(1), pages 17-31.
    2. Kropf, Andreas & Sauré, Philip, 2014. "Fixed costs per shipment," Journal of International Economics, Elsevier, vol. 92(1), pages 166-184.
    3. Vannoorenberghe, Gonzague & Wang, Zheng & Yu, Zhihong, 2016. "Volatility and diversification of exports: Firm-level theory and evidence," European Economic Review, Elsevier, vol. 89(C), pages 216-247.
    4. Costas Arkolakis, 2016. "A Unified Theory of Firm Selection and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(1), pages 89-155.

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