Giorgio Barba Navaretti (Universita’ di Milano e Centro Luca d’Agliano)

“It takes (more than) a moment: Revisiting the link between firm productivity and aggregate exports”

Abstract

This paper exploits a unique data set covering a panel of 16 European countries and 21 manufacturing industries to examine within sectors which features of a country’s firm productivity distribution are relatedto its aggregate export performance. It provides robust evidence that not only the first but also also highermoments of the firm productivity distribution matter. This is at odd with the predictions of the ‘standard’ trade model with firm heterogeneity a la Melitz (2003), in which the joint assumptions of CES demand, ‘iceberg’ export cost and Pareto productivity distribution imply that only the first moment should matter.It also offers a word of caution on the quantication of the welfare effects of trade policies based on that model in the wake of Arkolakis et al. (2012).