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The twin peaks of the export intensity distribution

Defever, Fabrice and Riaño, Alejandro (2022) The twin peaks of the export intensity distribution. Journal of the European Economic Association, 20 (3). 1347 – 1394. ISSN 1542-4766

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Identification Number: 10.1093/jeea/jvac006

Abstract

Received wisdom suggests that most exporters sell most of their output domestically. We show, however, that the distribution of export intensity varies substantially across countries and is often bimodal, displaying “twin peaks”—that is, large shares of both low- and high-intensity exporters coexisting alongside each other within a country. We reconcile this new stylized fact with an otherwise standard model of trade in which firms face firm-destination-specific revenue shifters that follow a lognormal distribution with sufficiently high dispersion. We structurally estimate the model and show that differences in countries’ size relative to the rest of the world can account for most of the observed cross-country variation in the distribution of export intensity in our data. While policies that incentivize firms to export a high share of their output account for a substantial share of the variation in the dispersion of firm-destination revenue shifters, they cannot fully account for the widespread prevalence of twin peaks around the world.

Item Type: Article
Official URL: https://academic.oup.com/jeea
Additional Information: © 2022 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
JEL classification: O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O50 - General
F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies
F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C12 - Hypothesis Testing
Date Deposited: 04 Jul 2022 07:24
Last Modified: 18 Jul 2022 08:45
URI: http://eprints.lse.ac.uk/id/eprint/115479

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