Opposing firm-level responses to the China shock: output competition versus input supply

Aghion, Philippe ORCID: 0000-0002-9019-1677, Bergeaud, Antonin, Lequien, Matthieu, Melitz, Marc J. and Zuber, Thomas (2024) Opposing firm-level responses to the China shock: output competition versus input supply. American Economic Journal: Economic Policy, 16 (2). 249 - 269. ISSN 1945-7731

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Abstract

We decompose the “China shock” into two components that induce different adjustments for firms exposed to Chinese exports: an output shock affecting firms selling goods that compete with similar imported Chinese goods, and an input supply shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm level, we show that the output shock is detrimental to firms’ sales, employment, and innovation. Moreover, this negative impact is concentrated in low-productivity firms. On the other hand, the impact of the input supply shock is reversed.

Item Type:	Article
Official URL:	https://www.aeaweb.org/journals/pol
Additional Information:	© 2024 American Economic Association
Divisions:	LSE
Subjects:	H Social Sciences > HG Finance H Social Sciences > HB Economic Theory
Date Deposited:	20 Jun 2024 13:57
Last Modified:	12 Dec 2024 04:20
URI:	http://eprints.lse.ac.uk/id/eprint/123934

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