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Yuanzhe Tang (CREST) “Firm-level export and import survival over the business cycle

December 18, 2023 @ 12:15 pm - 1:30 pm

Macro seminar
Time : 12h15 – 13h30
Date : 18 Décembre 2023

Salle 3001

Yuanzhe Tang (CREST) “Firm-level export and import survival over the business cycle”

Abstract: This paper examines how business cycle conditions affect the dynamics of exporting and importing firms, using micro-level data on trade spells initiated by French firms over the period 1998-2015. First, we find evidence of firm reallocation during recessions: entry rates fall, exit rates increase and both entrants and exiters exhibit higher productivity. Selection into export and import participation thus becomes tougher. Second, business cycle conditions at times of entry have persistent effects on exporters and importers: cohorts ‘born’ in recessions have systematically a lower exit hazard at any age, despite having a similar genuine age dependence path. In other words, firms entering export/import markets in a recession enjoy a one-off premium to their spell duration prospects. They also exhibit persistently different characteristics from firms that enter in better times. Third, conclusions are largely unaffected when we use a joint model of export and import duration. Our estimates reveal a positive correlation in the unobservable factors explaining both decisions. To put it simply, exporters-importers tend to have either short-short or long-long spells. Overall, our results suggest that business cycle conditions affect trade participation in the short- and long-run, with both ‘cleansing’ and ‘scarring’ effects of recessions at work.

Joint work : Grégory Corcos, Silviano Esteve-Pérez and Salvador Gil-Pareja