TY - JOUR
T1 - Do trade policy differences induce sorting? Theory and evidence from Bangladeshi apparel exporters
AU - Demidova, Svetlana
AU - Kee, Hiau Looi
AU - Krishna, Kala
N1 - Funding Information:
We are grateful to Susumu Imai, Hajime Katayama, Mushfiq Mobarak, Ariel Pakes, Jim Tybout and participants at seminars at the IMF Institute, the Philadelphia Fed, Cornell University, the University of Texas, Austin, the 2007 EIIE conference in Slovenia, and at the NBER December 2005 ITI meetings for comments on earlier drafts. We thank the World Bank for providing research funding. Krishna thanks Princeton University for support as an International Economics Section Research Fellow for 2006–2007. Demidova thanks the Art Research Board at McMaster University for the financial support. The views expressed here are those of the authors and do not necessarily reflect those of the institutions to which they are affiliated.
PY - 2012/7
Y1 - 2012/7
N2 - This paper provides a new heterogeneous firm model for trade where firms differ in their productivity and experience different market demand shocks. The model incorporates the variations in trade policy, trade preferences, and the rules of origin needed to obtain them that are faced by Bangladeshi garment exporters to the US and EU. We estimate firm's productivity using an extension of the Olley Pakes procedure that accounts for the biases arising from both demand shocks and productivity being unobserved. Predictions of the model are then tested non-parametrically and are shown to be supported empirically.
AB - This paper provides a new heterogeneous firm model for trade where firms differ in their productivity and experience different market demand shocks. The model incorporates the variations in trade policy, trade preferences, and the rules of origin needed to obtain them that are faced by Bangladeshi garment exporters to the US and EU. We estimate firm's productivity using an extension of the Olley Pakes procedure that accounts for the biases arising from both demand shocks and productivity being unobserved. Predictions of the model are then tested non-parametrically and are shown to be supported empirically.
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U2 - 10.1016/j.jinteco.2011.12.008
DO - 10.1016/j.jinteco.2011.12.008
M3 - Article
AN - SCOPUS:84862577048
SN - 0022-1996
VL - 87
SP - 247
EP - 261
JO - Journal of International Economics
JF - Journal of International Economics
IS - 2
ER -