On Thursday, June 22 at 4.40 pm, International College of Economics and Finance and International Laboratory of Financial Economics will hold the Research Seminar in Finance.
Speaker: Dmitry Livdan (UC Berkeley)
Theme: "Dissecting Gravity: From Customs Forms to Country-Level Trade Flows" joint with Vladimir Sokolov and Amir Yaron
Venue: Shabolovka st., 26, room 3402
Abstract: Using a novel data set for Russian exporters allowing for the exact firm-to-firm distances, we study the micro-foundations of gravity by testing at all levels of trade flows: individual cargo, firm, and country. We find that distance does a poor job explaining variation in individual cargo values as most of its explanatory power is absorbed by the recipient fixed effects and transportation dummies. At the firm level the export value increases/decreases with distance with/without the recipient fixed effects in the gravity specification. Next, we show that the classic gravity holds at the country level in spite of Chaney (2016) gravity sufficiency conditions being violated for Russian exporters. We then propose that for gravity to hold at the country level, the firm-level extensive trade margin -- the number of shipments -- has to decline faster than the intensive trade margin -- value-per-shipment -- increases with distance. Finally, we demonstrate that using the exact distance increases the magnitude of the distance elasticity of value by 33% at the country level.
Everyone interested is welcome to attend!
Pass can be ordered by:
contact: Zheleznov Slava