Search Results

Showing results 1 to 10 of approximately 24.

(refine search)
SORT BY: PREVIOUS / NEXT
Author:Alessandria, George 

Journal Article
Understanding exports from the plant up
Some companies export their products abroad, while others choose to sell only in their home market. Similarly, over time, some nonexporters become exporters and some exporters stop exporting. The decision to export is a big, important decision for an organization, one that takes time and resources but one that can lead to an expansion of sales and profits. Policymakers recognize that although exporting isn?t easy, it can boost sales and create jobs when successful. To help in this process, many states devote substantial resources to encouraging exports, including loans, trade missions, and trade fairs. Even the federal government has policies that encourage exporting, providing special tax treatment of profits on export sales and low-interest loans. In ?Understanding Exports from the Plant Up,? George Alessandria and Horag Choi discuss some key factors that affect companies? decisions to export by describing some salient characteristics of establishments that export and then building a simple model of the decision to export that captures these features.
AUTHORS: Choi, Horag; Alessandria, George
DATE: 2010

Working Paper
Export dynamics in large devaluations
We study the source and consequences of sluggish export dynamics in emerging markets following large devaluations. We document two main features of exports that are puzzling for standard trade models. First, given the change in relative prices, exports tend to grow gradually following a devaluation. Second, high interest rates tend to suppress exports. To address these features of export dynamics, we embed a model of endogenous export participation due to sunk and per period export costs into an otherwise standard small open economy. In response to shocks to productivity, the interest rate, and the discount factor, we find the model can capture the salient features of export dynamics documented. At the aggregate level, the features giving rise to sluggish exports lead to more gradual net export reversals, sharper contractions and recoveries in output, and endogenous stagnation in labor productivity.
AUTHORS: Yue, Vivian Z.; Pratap, Sangeeta; Alessandria, George
DATE: 2013

Working Paper
Establishment heterogeneity, exporter dynamics, and the effects of trade liberalization
The authors study the effects of tariffs in a dynamic variation of the Melitz (2003) model, a monopolistically competitive model with heterogeneity in productivity across establishments and fixed costs of exporting. With fixed costs of starting to export that are on average 3.7 times as large as the costs incurred to continue as an exporter, the model can match both the size distribution of exporters and annual transition in and out of exporting among US manufacturing establishments. The authors find that the tariff equivalent of these fixed costs is nearly 30 percentage points. They use the calibrated model to estimate the effect of reducing tariffs on welfare, trade, and export participation. The authors find sizeable gains to moving to free trade equivalent to 1.03 percent of steady state consumption. Considering the transition dynamics following the cut in tariffs, they find that the model predicts economic activity overshoots its steady state, with the peak in output coming 10 years after the trade reform. Because of this overshooting, steady state changes in consumption understate the welfare gain to trade reform. The authors also find simpler trade models that abstract from these export dynamics provide a poor approximation of the aggregate responses from our more general model.
AUTHORS: Choi, Horag; Alessandria, George
DATE: 2011

Working Paper
Trade adjustment dynamics and the welfare gains from trade
We build a micro-founded two-country dynamic general equilibrium model in which trade responds more to a cut in tariffs in the long run than in the short run. The model introduces a time element to the fixed-variable cost trade-off in a heterogeneous producer trade model. Thus, the dynamics of aggregate trade adjustment arise from producer-level decisions to invest in lowering their future variable export costs. The model is calibrated to match salient features of new exporter growth and provides a new estimate of the exporting technology. At the micro level, we find that new exporters commonly incur substantial losses in the first three years in the export market and that export profits are backloaded. At the macro level, the slow export expansion at the producer level leads to sluggishness in the aggregate response of exports to a change in tariffs, with a long-run trade elasticity that is 2.9 times the short-run trade elasticity. We estimate the welfare gains from trade from a cut in tariffs, taking into account the transition period. While the intensity of trade expands slowly, consumption overshoots its new steady-state level, so the welfare gains are almost 15 times larger than the long-run change in consumption. Models without this dynamic export decision underestimate the gains to lowering tariffs, particularly when constrained to also match the gradual expansion of aggregate trade flows.
AUTHORS: Alessandria, George; Choi, Horag; Ruhl, Kim J.
DATE: 2014-04-25

Working Paper
Export dynamics in large devaluations
We study the source and consequences of sluggish export dynamics in emerging markets following large devaluations. We document two main features of exports that are puzzling for standard trade models. First, given the change in relative prices, exports tend to grow gradually following a devaluation. Second, high interest rates tend to suppress exports. To address these features of export dynamics, we embed a model of endogenous export participation due to sunk and per period export costs into an otherwise standard small open economy. In response to shocks to productivity, the interest rate, and the discount factor, we find the model can capture the salient features of export dynamics documented. At the aggregate level, the features giving rise to sluggish exports lead to more gradual net export reversals, sharper contractions and recoveries in output, and endogenous stagnation in labor productivity.
AUTHORS: Yue, Vivian Z.; Pratap, Sangeeta; Alessandria, George
DATE: 2013

Journal Article
The exchange rate: what's in it for prices?
Large movements in the exchange rate are quite common, and they substantially alter one's purchasing power when traveling abroad. Yet these exchange rate movements tend to have a smaller impact on the price of foreign goods that are imported. Following an appreciation of the euro against the dollar, European firms selling products to American firms for import do not raise their prices by nearly as much as the prices they charge consumers in the European market. Similarly, American firms sell their products at higher prices in Europe than at home. This incomplete, or partial, pass-through of exchange rate movements to domestic import prices is important for inflation, American purchasing power, and the pattern of trade between countries. In this article, George Alessandria and Jarcy Zee discuss some of the reasons why changes in the exchange rate may not be fully passed through to import prices.
AUTHORS: Zee, Jarcy; Alessandria, George
DATE: 2009

Journal Article
The great trade collapse (and recovery)
The collapse and rebound in U.S. international trade from 2008 to 2010 was quite stunning. Over this period, the fluctuations in international trade were bigger than the fluctuations in either production of or expenditures on traded goods. These relatively large fluctuations in international trade were surprising to some, since international trade had been growing at a very fast pace for quite a long time. They were equally surprising for trade theorists, since these movements in trade arise in standard models of international trade only when the costs of international trade rise and fall substantially. In this article, George Alessandria places these recent fluctuations in international trade in historical context. He then considers some explanations for the relatively large fluctuations in trade related to the nature of trade, protectionism, and financial constraints.
AUTHORS: Alessandria, George
DATE: 2013

Journal Article
Why are goods so cheap in some countries?
Looking around the world, we observe substantial differences across countries in prices for most goods. These price differences also tend to be positively correlated with income differences, so that citizens of high-income countries tend to pay more for the same goods than citizens in low-income countries. In ?Why Are Goods So Cheap in Some Countries?,? George Alessandria and Joseph Kaboski summarize some of the evidence related to the big price differences across countries for a broad set of goods. They then discuss the relationship between prices and income levels and some possible explanations for that relationship.
AUTHORS: Alessandria, George; Kaboski, Joseph P.
DATE: 2008

Journal Article
Trade deficits aren’t as bad as you think
Although the amount of U.S. imports and exports has varied greatly over time, in recent years, the U.S. has been running trade deficits. Some people react to such trade deficits with doom and gloom; others cite them as evidence that foreign governments are not playing fair in U.S. markets; still others argue that deficits demonstrate that we are living beyond our means. In ?Trade Deficits Aren?t as Bad as You Think,? George Alessandria offers an alternative view: Trade deficits have benefits. They shift worldwide production to its most productive locations, and they allow individuals to smooth out their consumption over the business cycle.
AUTHORS: Alessandria, George
DATE: 2007

Working Paper
Do sunk costs of exporting matter for net export dynamics?
Not all firms export every period. Firms enter and exit foreign markets. Previous research has suggested that these export participation decisions have significant aggregate implications. In particular, it has been argued that these export decisions are important for the comovements of net exports and the real exchange rate. In this paper, the authors evaluate these predictions in a general equilibrium environment. Specifically, assuming that firms face an up-front, sunk cost of entering foreign markets and a smaller period-by-period continuation cost, they derive the discrete entry and exit decisions yielding exporter dynamics in an otherwise standard equilibrium open economy business cycle model. The authors show that the export decisions of firms in the model are influenced by the business cycle in a manner consistent with evidence presented for U.S. exporters. However, in contrast to previous partial equilibrium analyses, model results reveal that the aggregate effects of these export decisions are negligible.
AUTHORS: Alessandria, George; Choi, Horag
DATE: 2005

FILTER BY year

FILTER BY Content Type

FILTER BY Author

Kaboski, Joseph P. 10 items

Choi, Horag 8 items

Midrigan, Virgiliu 7 items

Pratap, Sangeeta 2 items

Yue, Vivian Z. 2 items

show more (4)

FILTER BY Jel Classification

E31 2 items

F12 2 items

FILTER BY Keywords

PREVIOUS / NEXT