Loading Events

« All Events

  • This event has passed.

MEDINA QUISPE Pamela (University of Toronto) “Capital-Reallocation Frictions and Trade Shocks”

September 23, 2019, 12:15 pm - 1:30 pm

Time: 12:15pm – 13:30 pm
Date: 23th of September 2019
Place: Room 3001

MEDINA QUISPE Pamela (University of Toronto) “Capital-Reallocation Frictions and Trade Shocks”

Abstract : What are the short- and medium-run aggregate effects of an international-trade shock that increases competition for domestic manufacturing industries? In this paper, we address this question by combining detailed firm-level investment data from several manufacturing industries in Peru, data on the import penetration of Chinese manufacturing goods in Peru, and a quantitative general-equilibrium model of trade with heterogeneous firms subject to idiosyncratic shocks. In the data, we find evidence of large frictions that slow down capital reallocation, either through disinvestment or firm exit, in response to negative profitability shocks. These frictions shape the empirical response of reallocation and selection to the increase in Chinese import competition. In our quantitative model, we show that partial investment irreversibility and general-equilibrium forces are key to assess the aggregate effects of the increase in Chinese import competition. The trade shock induces slow transitional dynamics, with gradual gains in aggregate productivity over several years, while the distribution of firm-level capital and productivity adjusts to the new stationary equilibrium.

Joint work with : Andrea Lanteri,  and Eugene Tan.


September 23, 2019
12:15 pm - 1:30 pm
Event Categories:


Edouard CHALLE
Julien PRAT