International Trade
A Balls-and-Bins Model of Trade
with Miklos Koren.
A number of stylized facts have been documented about the extensive margin of trade---which firms export, and how many products they send to how many destinations. We argue that the sparse nature of trade data is crucial to understanding these stylized facts. Typically the number of observations---that is, total shipments---is low relative to the number of possible classifications---e.g., countries and product codes. We propose a statistical model to account for the sparsity of trade data.
Economies of Scale and the Size of Exporters
with Miklos Koren.
Exporters are few---less than one-fifth among U.S. manufacturing firms---and are larger than non-exporting firms---about 4-5 times more total sales per firm. These facts are often cited as support for models with economies of scale and firm heterogeneity as in Melitz (2003). We find that the basic Melitz model cannot simultaneously match the size and share of exporters given the observed distribution of total sales. Instead exporters are expected to be between 90 and 100 times larger than non-exporters.
