Midwest International Trade Conference

Summary of All Sessions
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#	Date/Time	Title/Location	Papers
1	April 10, 2026 13:30-15:00	1-A     Location: Pfahl 230	3
2	April 10, 2026 13:30-15:00	1-B     Location: Pfahl 240	3
3	April 10, 2026 15:30-17:00	2-A     Location: Pfahl 230	3
4	April 10, 2026 15:30-17:00	2-B     Location: Pfahl 240	3
5	April 11, 2026 9:00-10:30	3-A     Location: Journalism 239	3
6	April 11, 2026 9:00-10:30	3-B     Location: Journalism 251	3
7	April 11, 2026 9:00-10:30	3-C     Location: Journalism 270	3
8	April 11, 2026 11:00-12:30	4-A     Location: Journalism 239	3
9	April 11, 2026 11:00-12:30	4-B     Location: Journalism 251	3
10	April 11, 2026 11:00-12:30	4-C     Location: Journalism 270	3
11	April 11, 2026 14:15-15:45	5     Location: Journalism 251	3
12	April 11, 2026 16:15-17:45	6     Location: Journalism 251	3
13	April 12, 2026 9:00-10:30	7-A     Location: Journalism 239	3
14	April 12, 2026 9:00-10:30	7-B     Location: Journalism 251	3
15	April 12, 2026 11:00-12:30	8-A     Location: Journalism 239	3
16	April 12, 2026 11:00-12:30	8-B     Location: Journalism 251	3

 

16 sessions, 48 papers, and 0 presentations with no associated papers

Midwest International Trade Conference
Detailed List of Sessions

Session 1: 1-A April 10, 2026 13:30 to 15:00 Location: Pfahl 230
Session Chair: Raymond Riezman, Aarhus University/UCSB/University of Iowa
Incorporating non-unitary income elasticities, choke prices and choke incomes into applied general-equilibrium models Abstract Traditional applied general-equilibrium (AGE) models have always faced trade-offs between analytical and computational tractability and counter-empirical restrictions. One is the assumption of homothetic preferences implying unitary income elasticities of demand, significantly inconsistent with data. Similarly, there is no “choke” income level, below which a certain good is not purchased and there is no choke price above which a good is not purchased, implying no changes in the extensive margin of trade. Here I analyze three different formulations of preferences which incorporate these features. The first two, Stone-Geary Modified (SGM) and direct explicit additivity (here labeled CRIE - constant relative income elasticity) have been rarely used before due to inherent limitations. Together with a third case, a modified version of traditional Armington, I avoid these constraints by introducing virtual substitute goods into a standard general-equilibrium framework. While other authors have explored these properties in alternative ways, my approaches have considerable advantages for high-dimension simulation models in that they retain homothetic CES structures and functional forms so that they can slot right into existing modeling formats. They require only small modifications to off-the-shelf cost and expenditure functions, and therefore goods and factor demand functions via Shepard’s lemma. Unobserved parameters can be calibrated from observed data and econometric estimates.
By James Markusen; University of Colorado, Boulder
Presented by: James Markusen, University of Colorado, Boulder
Do Sanctions Inhibit Innovation? The Case of the U.S. Abstract This paper explores the impact of US sanctions on innovation in the United States. Using data from the U.S. Patent and Trademark Office (USPTO) from 2000 to 2022, we analyze patenting activity in the U.S. by inventors from sanctioned countries. The sanctions data are from the Global Sanctions Database (GSDB), which provides detailed information on sanctions by sender, target, type, and objective. Our findings show that US sanctions significantly reduce patenting activity by inventors from sanctioned countries within the US, as well as joint patents co-authored with US inventors. We also conducted a heterogeneity analysis to identify which sanction types drive these effects and performed multiple robustness checks to validate our findings. This study contributes to the growing literature on the intersection of sanctions and innovation.
By Nune Hovhannisyan; Loyola University Maryland    Anna Miromanova; Lewis and Clark College
Presented by: Nune Hovhannisyan, Loyola University Maryland
Import-induced Cross-Occupation Worker Mobility and the Wage Effects Abstract This paper investigates the secondary effect of import competition by analyzing the impacts of the worker mobility across occupations induced by rising import competition on the wages of the occupations that receive the trade-affected workers. Existing literature on the wage effects of import competition focuses on the direct effect on the production workers or manufacturing workers who are facing the rising import competition head-on. This study offers more a general equilibrium analysis by utilizing the worker movement of workers across occupations after they are directly hit by the import competition. IPUMS CPS longitudinal sample allows us to observe occupations in two consecutive years and identify occupation switching behavior, the origin occupations, and the destination occupations. We then analyze the impacts of the inflow of trade-affected workers into a destination occupation for those who are flowing into the occupation (switchers) and those who were already in the occupations (non-switchers/incumbents). Our preliminary finding shows that the occupation-switching behavior of trade-affected workers workers exerts sizable downward pressure on wages in the destination occupations. The wage effects range around 1.5 to 3.0\% losses for one standard deviation increase in the inflow measure. These negative effects do not only hurt the workers who are directly facing the competition, they also influence the wages of highly educated workers, non-production workers, and non-manufacturing workers. They influence the wages of those who switches occupations along with the trade-affected workers and the wages of the incumbent workers in the receiving occupations. The import-induced cross-occupation mobility shows a different pattern of impacts than the general labor mobility, implying that the trade-affected workers have distinctive pattern of occupation switching and the resulting impacts are also different from the general labor supply effect.
By Vasilios Kosteas; Cleveland State University    Jooyoun Park; Kent State University
Presented by: Jooyoun Park, Kent State University
Session 2: 1-B April 10, 2026 13:30 to 15:00 Location: Pfahl 240
Session Chair: Georg Schaur, University of Tennessee
Credit Airlines: Financing, Modes of Export, and Comparative Advantage Abstract We investigate how transport‑mode–specific payment lags and access to finance jointly shape comparative advantage. Using a novel Colombian dataset linking banks, firms, exports, and export payments, we document three facts. First, many products are shipped by both air and sea. Second, sea shipments experience payment lags of about one quarter relative to air, raising working‑capital needs for maritime exports. Third, better access to bank credit reduces the likelihood of shipping by air. We build and calibrate a trade model where firms borrow to finance production until delivery and choose between fast air or slow sea; the payment‑lag channel explains about 10 percent of finance‑driven changes in comparative advantage.
By Maria Aristizabal-Ramirez; Federal Reserve Board    Luis Baldomero-Quintana; William & Mary    Barthelemy Bonadio; NYU Abu Dhabi    Sara Echeverri-Diez; University of Chicago    Christian Posso; Banco de la República de Colombia
Presented by: Luis Baldomero-Quintana, William & Mary
Do All Inputs Matter? Export Market Expansion, Capital Goods Adoption, and Upgrading Abstract How do firms respond to expanding export markets? Firms in developing countries may upgrade by accessing high-quality inputs, skilled workers, and advanced technologies used in industrialized economies. While the effects of accessing intermediate inputs (e.g., raw materials) have been well documented, little is known about the impact driven by capital goods (e.g., machinery and equipment). This paper fills this gap by emphasizing capital goods adoption as a key driver of both product and process upgrading. I exploit the removal of the Multi-Fibre Arrangement quotas in 2005 as a significant positive export demand shock for Chinese textile and apparel exporters. Using Customs data from 2001 to 2015 and detailed industry information, I identify direct machine imports at the firm level. The difference-in-differences analysis shows that: (i) firms with higher exposure to export market expansion are more likely to import high-end machines; (ii) machine-adopting firms are found to subsequently upgrade their products: exporting higher values and wider varieties of products, at higher prices and with improved quality, to more high-income countries; (iii) an increasing relative labor-capital share is observed, particularly among machine-adopting firms; (iv) these results are primarily driven by the intensive rather than the extensive margin. To rationalize these empirical findings, I develop a theoretical framework incorporating firms' capital goods adoption decisions and endogenous technological change. The model emphasizes the presence of fixed costs and adjustment frictions involved in adopting high-end machines. Welfare gains from trade may be underestimated if the unique role of capital goods in determining process upgrading is not taken into account.​
By Lidong Yang; George Washington University
Presented by: Lidong Yang, George Washington University
Sourcing Frictions Meet Inventories: A Dynamic Ricardian Framework for the Impact of Trade Shocks Abstract Relative to long-run outcomes, short-run import responses to tariff increases may be smaller due to lower trade elasticities across sourcing countries, but larger due to inventory-driven timing adjustments in ordering. This paper develops a unifying Ricardian framework that accommodates both mechanisms while preserving tractability for solving dynamic general equilibrium responses with a realistic production network involving many industries and countries. In this model, traders set optimal intertemporal prices based on individual inventory positions and perceived future changes. Switching to optimal suppliers occurs occasionally based on expected future profits. Aggregation is simple due to a novel proportionality feature that avoids the need to track distributions of inventory levels across individual traders. A tariff shock persisting for one month, comparable in magnitude to the 2025 Liberation Day tariffs, induces a sharp decline in US imports, featuring ordering pauses among traders with sufficient inventories, and substantial cumulative welfare losses that unfold gradually over time.
By Junyuan Chen
Presented by: Junyuan Chen,
Session 3: 2-A April 10, 2026 15:30 to 17:00 Location: Pfahl 230
Session Chair: Raymond Riezman, Aarhus University/UCSB/University of Iowa
External Negotiations and Customs Union Stability Abstract Persistent exit threats challenge the stability of customs unions, yet withdrawals are rare. This paper applies a structural model to study internal stability under external trade pressures within Mercosur, the largest free trade agreement in South America. The model includes external bargaining, asymmetric tariffs, and is calibrated with sectoral trade data from 5 different years, using counterfactual negotiations with USA, China and European Union. Documenting the gains and losses from scenarios of single-country or bloc negotiations under the different setups. Results show that small members gain more from bloc negotiations in terms of percentage of GDP, while large countries gain less, they face concentrated losses within industries, which might explain why the bloc stumbles in large negotiations. Gains from joint negotiation vary widely, with smaller countries benefiting most and others seeing limited increases.
By Guilherme Paiva Pinto
Presented by: Guilherme Paiva Pinto,
Building Walls and Building Blocks: The Two-Tale Story of the 2017-2019 U.S.-China Trade War Abstract We employ a product-level gravity model of international trade to understand the effects of global trade policy changes during the first Trump administration. Our flexible model controls for both the changes in the U.S. and China’s tariff policies as well as the direct (bilateral) tariffs implemented by other countries (“bystanders”). Crucially, these latter policies include retaliatory tariffs against American exports. We also control for variables identified in the literature to measure relative market access, including the level of tariffs faced by an exporter in alternative destinations and the level faced by other exporters in the same destination. Our results confirm the adverse effects of the trade war on trade flows between the U.S. and China. However, we highlight the relevant negative role played by U.S.-bystander tariff escalation and the positive role of tariff liberalization among China and bystander countries in promoting trade. Our predicted trade flows show that the de-globalization (building walls) trend initiated by the first Trump administration reduced U.S. trade with China and bystanders. We find that China and bystanders countered this approach by reinforcing their trade links (building blocks) through preferential trade agreements (PTAs) and multilateral tariff reduction. The net effect of both initiatives is a decline in global trade, uncovered by our consideration of retaliatory tariffs on U.S. exports and the impact of relative market access controls.
By Peri Silva; Kansas State University    Sydney Weber; Kansas State University
Presented by: Sydney Weber, Kansas State University
Immigration, Trade, & Technology Capital Abstract Recent US policy has made both trade and skilled immigration into the US more restrictive. While the impact of these policies on some macroeconomic variables is evident, their joint impact on innovative activities is not. In this paper, we incorporate both policy levers into a dynamic general equilibrium model in which final goods producers make costly investments in technology capital. Domestic and foreign intermediate goods producers rent this technology capital, which augments both native and foreign born skilled labor. We parameterize the model to match data from the US and China and then run counterfactual exercises to understand the joint impact that the two policies have on production and investment in technology capital. We find that while both policies reduce the accumulation of technology capital, trade restrictions reduce it by more than a reduction in skilled immigration. Moreover, when the two policies are combined, both the domestic and the foreign stock of technology capital fall, reducing domestic production, as well as bilateral trade flows. This has implications for how these policies impact long run productivity in both countries.
By Mishita Mehra; University of Richmond    Andrea Waddle; University of Richmond
Presented by: Andrea Waddle, University of Richmond
Session 4: 2-B April 10, 2026 15:30 to 17:00 Location: Pfahl 240
Session Chair: Georg Schaur, University of Tennessee
Triadic Gravity in Intermediated Petrochemical Trade Abstract How does intermediated trade alter the response of bilateral trade flows to cost shocks? We show that when firms can reroute shipments through intermediary hubs, the bilateral trade elasticity is strictly attenuated relative to the standard gravity benchmark—in proportion to the share of trade currently flowing directly between the origin and the destination. We establish this result theoretically and validate it using transaction-level data from a Korean petrochemical trading house with 25 offices worldwide, where we observe the complete buyer–seller–intermediary triad for every shipment. In this network, 84.5% of origin–destination pairs route all trade through hubs, so a direct-route cost shock leaves their bilateral trade volume entirely unchanged—while standard gravity would predict a large negative response for those same pairs. Aggregating across all routes, standard gravity overstates the trade-flow response to a uniform bilateral cost shock by a factor of 6.5 in this network. These findings imply that bilateral gravity models systematically overstate trade losses from tariff increases in sectors with deep intermediation.
By Hyungjin Kim; Korea Development Institute    Yang Shen; Hanyang University
Presented by: Hyungjin Kim, Korea Development Institute
Information Spillovers in Export Destinations Abstract We study how information spillovers —learning about new destinations through export activity— shape firms’ entry and exit decisions in foreign markets. Using Mexican customs data, we document the existence of these spillovers and show that firms leverage their export experience to refine subsequent market choices. To rationalize these patterns, we develop a dynamic model of export supply with learning, where firms select destinations based on beliefs about profitability. We quantify the model by estimating fixed costs and foreign markets’ export profitability, and use counterfactual simulations to assess the role of spillovers in shaping destination diversification. The results indicate that, absent spillovers, the share of Mexican firms exporting beyond the USA would fall by 21.6%. Moreover, reducing fixed costs in a given country not only raises entry into that market but also stimulates exporting to other destinations.
By Jose Moran; Banco de Mexico
Presented by: Jose Moran, Banco de Mexico
The Rule of the Strongest and the Prospects for Global Free Trade Abstract This paper examines how mitigating tariff-bargaining-power imbalances across countries promotes global trade liberalization. I develop a static tariff-setting game with three countries in which one country is hegemonic, i.e. it has greater tariff-bargaining power than the other two. The hegemonic country can choose whether to exercise its full bargaining power or strategically reduce it in order to select, among all coalition-proof Nash equilibria, the trade regime that is most favorable to it. Building on a standard three-country competing-exporters framework of endogenous trade agreements, I first show that the requirement of complete elimination of internal tariffs within free trade agreements (FTAs) is pivotal for achieving global free trade. When countries are instead allowed to negotiate their internal tariffs, a myopic hegemon prefers non-complementarity trade agreements (NCTAs), i.e. agreements in which the non-member does not benefit from the optimal reduction in the bloc’s external tariffs, to free trade agreements for mild levels of power asymmetry. Furthermore, a strategic hegemon prefers NCTAs, but the world achieves higher global welfare under FTAs than under NCTAs. Finally, I show that a strategic hegemon never prefers multilateralism to NCTAs.
By Antoine Noël; Université Laval
Presented by: Antoine Noël, Université Laval
Session 5: 3-A April 11, 2026 9:00 to 10:30 Location: Journalism 239
Session Chair: Sergey Nigai, University of Colorado Boulder
Carbon Tariffs and Trade: Industry Adjustment in a Small Open Economy Abstract The feasibility of broader and more stringent carbon pricing schemes is often constrained by concerns about competitiveness losses and emissions leakage. In this context, Border Carbon Adjustments (BCAs) have gained prominence as a policy instrument to level the playing field between domestic and foreign producers and to create incentives for other economies to strengthen their climate efforts. Using a dynamic multi-country, multi-sector model, we investigate the sectoral and macroeconomic effects for a small open economy (SOE)—Colombia—arising from the credible implementation of a BCA by a large trading partner, the European Union. We also assess whether the SOE has incentives to tighten its own climate policy in response to the foreign measure. Our results show that higher tariffs generate a sectoral reallocation toward the clean sector in the SOE, with moderate welfare effects. Moreover, the SOE benefits from increasing its domestic carbon price only if the tariff adjustment prescribed by the BCA is sufficiently responsive to the carbon-price gap between economies.
By Oscar Avila-Montealegre; Central Bank of Colombia    Mauricio Rodriguez; Universidad del Rosario
Presented by: Oscar Avila-Montealegre, Central Bank of Colombia
Waste Material Imports and the Production-Pollution Tradeoff: Evidence and Policy Abstract We examine how waste material imports affect firm-level pollution and productivity in China during 2000-2013. Using a shift-share instrumental variable strategy exploiting tariff differentials between virgin and waste materials (plastic, paper, metal), we find that a one percentage point increase in waste import share raises pollution intensity, defined as emissions per unit of real output, by 18.6\% for SO₂, 12.13\% for industrial dust, and 30\% for soot, while simultaneously increasing real output by 4.66\% and real output per employee by 1.68\%. Motivated by these findings, we then develop a general equilibrium model incorporating waste recycling and disposal externalities, demonstrating that optimal policy requires both environmental taxes and waste tariffs: environmental taxes reduce both aggregate emissions and waste disposal, while tariffs shift sourcing from imported to domestic waste, reducing disposal externalities while preserving local production.
By Yifan Cai; University of Wisconsin-Madison    Luyi Zeng; University of Wisconsin-Madison    Xiaoou Zhan; University of Wisconsin-Madison
Presented by: Yifan Cai, University of Wisconsin-Madison
Impact of Congestion on Aggregate Output Abstract Each year, India spends about $6 billion on construction and improvement of roads, yet severe congestion continues to plague the country, with commuters losing more than half of their daily travel time to traffic delays. In this paper, I study the impact of road congestion on aggregate output. Identification exploits the spatial variation that a particular type of steel input, produced in only one region of India, has to travel across the country. Using novel Indian data, my paper provides direct empirical evidence that congestion increases intermediate input prices. Exploiting this channel, my calibrated quantitative spatial general equilibrium model suggests: complete removal of congestion can increase aggregate output to about half a percent - amounting to about $9.11 billion gains. My results reveal a new mechanism highlighting the role of travel time on aggregate welfare that was previously crowded by travel distance.
By Ritabrata Bose; Arizona State University
Presented by: Ritabrata Bose, Arizona State University
Session 6: 3-B April 11, 2026 9:00 to 10:30 Location: Journalism 251
Session Chair: William Hauk, University of South Carolina
Global Ripple Effects of Corporate Tax Reforms Abstract We study international spillovers of corporate tax reforms in a fragmented global tax regime. Using firm-level evidence on the 2017 U.S. Tax Cuts and Jobs Act (TCJA) and a quantitative general-equilibrium model, we illustrate how multinational enterprises (MNEs) propagate local policy shocks throughout the global economy. Our framework emphasizes two key intrinsic properties of intangible capital: non-rivalry and mobile ownership. We find the TCJA generated positive outward spillovers: First, it boosted U.S. MNEs’ intangible investment, raising their foreign subsidiaries’ output. Second, it increased tangible investment of foreign MNEs’ U.S. subsidiaries, incentivizing them to expand intangible investment at home. Conversely, a Global Minimum Tax (GMT) implemented by the rest of the world generates negative inward spillovers for the United States, even if U.S.-parented MNEs are exempt. These findings illustrate that there is no such thing as a purely domestic corporate tax policy.
By Sebastian Dyrda; University of Toronto    Guangbin Hong; Michigan State University    Muhammad Ali Sajid; University of Toronto    Joseph Steinberg; University of Toronto
Presented by: Guangbin Hong, Michigan State University
The South-South Development Promise and the Substitution Effect: Evidence from Malawi's Diplomatic Pivot Abstract This study evaluates the South-South development promise by examining Malawi’s 2007 diplomatic pivot from Taiwan to Mainland China. Exploiting this abrupt transition as a quasinatural experiment, the paper analyzes international trade and investment flows using a Poisson Pseudo-Maximum Likelihood (PPML) estimator and an inverse hyperbolic sine transformation, respectively. Results reveal a sharp bilateral surge in exports and inflows of FDI. However, the study identifies a powerful Vinerian trade diversion: these gains were almost entirely offset by the displacement of traditional commercial partners, leaving aggregate export volumes and total capital stock stagnant. Crucially, the growth in exports was confined to the intensive margin of primary commodities, failing to trigger the structural transformation anticipated by policymakers. These findings suggest that for small, non-resource-abundant nations, South-South cooperation may recalibrate a nation’s strategic space in a zero-sum manner, substituting for, rather than supplementing, existing foundations of global integration.
By Promise Kamanga; Hamilton College
Presented by: Promise Kamanga, Hamilton College
Heterogeneous migration responses to trade policy Abstract We document that the migration and sectoral reallocation in response to trade liberalization in China is driven by the youth, particularly those who just joined the labor market in 2002. To explain the strong age heterogeneity, we develop and estimate a migration model where workers face uncertainty about income at destination locations and have CRRA utility. Migration responds to both expected income differences and income risk differences across locations. We estimate migration elasticities with respect to these income moments and recover age-specific risk-aversion parameters. Older cohorts exhibit significantly higher risk aversion than younger ones, leading to steeply rising estimated migration costs with age, which accounts for the observed sharp decline in migration rates across age groups. Counterfactual analysis imposing uniform risk aversion across cohorts yield migration costs that are essentially flat with age.
By Hundanol Kebede; Southern illinois university carb    Jianfeng Wu; Fudan University
Presented by: Hundanol Kebede, Southern illinois university carb
Session 7: 3-C April 11, 2026 9:00 to 10:30 Location: Journalism 270
Session Chair: Amy Glass, Texas A&M University
The impact of non-tariff trade measures on labor outcomes: lessons from the US-China trade war Abstract Over the past decade, trade tensions have risen steadily, particularly between the U.S. and China, two central players in global trade. The 2018 U.S.–China trade war drew significant attention for its wide-ranging economic consequences, and more recently, trade conflicts have reemerged both bilaterally and with other U.S. partners. A large body of literature examines the 2018 trade war’s effects on trade balances, prices, welfare, and labor markets (Amiti, Redding, and Weinstein, 2019; Fajgelbaum et al., 2020; Carter and Steinbach, 2019; Autor et al., 2024). While outcomes vary across sectors and regions, most studies consistently find welfare losses in both countries and negative employment effects in industries facing retaliatory tariffs and trade disruptions. Among the sectors most affected, agriculture proved especially vulnerable. Chinese retaliatory tariffs in 2017 targeted $26.9 billion in U.S. farm exports—roughly one-third of farm income from exports (Hopkinson, 2018; Adjemian, Smith, and He, 2021)—reducing U.S. agricultural sales to China by about $14.4 billion. Autor et al. (2024) further highlight labor market impacts across both agriculture and manufacturing. Much of the literature emphasizes U.S. tariffs, China’s retaliatory tariffs, and U.S. subsidies, but less attention has been paid to non-tariff barriers (NTBs). Chen, Hsieh, and Song (2022) show that Chinese NTBs accounted for nearly half the decline in U.S. exports to China. In particular, after the 2020 US-China trade agreement, US agricultural import shares in China rose despite unchanged tariffs, suggesting that China relied heavily on NTBs and other tools beyond tariffs to shape trade outcomes. This paper examines the impact of non-tariff barriers (NTBs) imposed by China on U.S. agricultural imports and their consequences for U.S. agricultural labor markets during the 2018 U.S.-China trade war. Analyses that rely solely on tariff data risk understating the true effects of the trade war, as NTBs are less transparent, harder to quantify, and often implemented in subtle ways. Capturing their overall and net effects is therefore critical for an accurate assessment of trade policy in the context of the trade war. Moreover, NTBs have been applied disproportionately to agricultural products, with China being a particularly prominent user of such measures over the years (Niu, 2018). Given the sensitivity of the agricultural sector to trade policy shifts, it is especially important to analyze the role of NTBs when examining labor outcomes in agriculture. We follow the econometric approach of Autor et al. (2024) to examine how trade policy affects agri-cultural labor at a disaggregated sector level. As in their study, we first estimate industry-level exposure to tariff changes during the U.S.–China trade war and then assess their impact on local employment at the county level. Our contribution is to expand the measure of foreign trade policy by incorporating both Chinese retaliatory tariffs and the ad valorem equivalents (AVEs) of Chinese NTBs. Given limited direct data on non-tariff measures, we adopt the method of Chen, Hsieh, and Song (2022) to estimate NTB changes in tariff-equivalent form, allowing us to compare their effects directly with those of tariffs. Our contributions are twofold. First, we provide policy-relevant evidence on the labor market impacts of NTBs, highlighting how NTBs, often overlooked relative to tariffs, can substantially affect economic outcomes. Second, our findings will offer insights into potential future trade conflicts, emphasizing the need for policymakers to account for trade barriers beyond traditional tariffs when assessing the broader consequences of trade wars.
By Diane Charlton; Montana State University    Amanda Countryman; Colorado State University    Sionegael ikeme; Colorado State University    Dale Manning; University of Tennessee
Presented by: Sionegael ikeme, Colorado State University
Imported Inputs, Knowledge Diffusion, and Uneven Firm Growth Abstract Firms differ substantially in trade participation. In this paper, we study the productivity gains from input trade in a heterogeneous-firm model with empirically consistent firm-level import intensity. Using matched firm-level data on production, trade, patents, and citations of Chinese manufacturers from 2000 to 2007, we document that (i) firms importing more varieties are larger, more productive, more innovative, and cite more foreign technologies, and (ii) expansions in import scope bring future firm-level productivity growth. Motivated by these facts, we build a heterogeneous-firm model in which imported inputs not only reduce current marginal production costs but also yield future productivity gains through knowledge diffusion. Trade frictions lead to heterogeneous returns to imported inputs and thus heterogeneous within-firm productivity growth. A rise in import tariffs reduces import intensity, weakens knowledge diffusion, and induces aggregate productivity losses. The losses are sizable and highly uneven across firms, with mid-productivity firms experiencing the largest declines, thereby shifting the firm size distribution to the left tail. Our model highlights the importance of firm heterogeneity and knowledge diffusion in shaping gains from trade and the design of trade policy.
By XUEXIN LI; University of Wisconsin - Madison
Presented by: XUEXIN LI, University of Wisconsin - Madison
Global Production Relocation with Gravity: A Triangle Perspective Abstract Standard gravity models treat global production relocation as a bilateral process between an origin (the previous production location) and a destination (the new host economy). This perspective fails to capture the triadic nature of modern value-chain dynamics. We propose a triangular framework that introduces a third node: the buyer economy, whose demand shocks trigger and direct relocation. Proposing a refined measure of global production relocation (Gao et al., 2022, 2025), we estimate a triangular gravity model across three periods of GVCs restructuring. Results reveal a two-stage mechanism: origins adjust in response to buyer-specific demand shocks, while displaced production is pulled toward destinations offering better access to the same buyer’s market. Tariff effects are strongly asymmetric: buyer tariffs significantly deter relocation into destinations but do not effectively push production out of origins. By exposing this triadic structure, we explain why bilateral models miss key policy and geopolitical effects.
By Xiang Gao; Chinese Academy of Sciences Academy of Mathematics and Systems Science    Yi Huang    Yu Zhao; Academy of Mathematics and System Science, Chinese Academy of Sciences    Geoffrey Hewings; REAL, Urbana Illinois, USA    Cuihong Yang; Academy of Mathematics and System Science, the Chinese Academy of Sciences
Presented by: Xiang Gao, Chinese Academy of Sciences Academy of Mathematics and Systems Science
Session 8: 4-A April 11, 2026 11:00 to 12:30 Location: Journalism 239
Session Chair: Sergey Nigai, University of Colorado Boulder
Mergers as Market Access Abstract We argue that mergers can function as a form of market access, enabling acquired products to "export" into new geographic markets by leveraging the acquirer’s distribution infrastructure. We develop a simple model of post-merger rollout in which reaching a market entails a large fixed access cost (wholesaler relationships, licensing/compliance, logistics, and shelf access), while adding an additional SKU within an existing network is much cheaper. Rollout incentives then depend on two product characteristics: similarity to the acquirer’s portfolio, which raises cannibalization and dampens expansion, and latent demand, which increases the profitability of entering additional markets once access is obtained. Using mergers in the U.S. spirits industry from 2010--2019, we link UPC-level NielsenIQ store coverage to a hand-built merger panel of 39 mergers and 292 products. A one-standard-deviation increase in similarity is associated with roughly 30% less post-merger store coverage, while a one-standard-deviation increase in latent demand is associated with roughly 27% more coverage; these effects sharpen at acquisition and are amplified for foreign acquisitions. Overall, variety gains from mergers are concentrated in low-similarity, high-demand products.
By Honey Batra; University of Minnesota    Minuk Kim; Bryn Mawr College
Presented by: Minuk Kim, Bryn Mawr College
The Impact of Geopolitical Conflicts on Trade, Growth, and Innovation Abstract Geopolitical conflicts have increasingly become a driver of trade policy. We study the dynamic costs of economic decoupling using a dynamic trade model with endogenous country-sector productivities. We show that the welfare losses from decoupling the global economy can be drastic, reaching over 6% globally and as high as 40% over 20 years for some regions. Dynamic losses are relatively larger in lower-income countries compared to richer countries like the United States. Two mechanisms are essential to capture these effects: technological diffusion and input-output linkages, both of which magnify welfare losses.
By Ben Fraser; University of Chicago
Presented by: Ben Fraser, University of Chicago
From Discrete Choice to Endogenous Distributions: Selection and Heterogeneity Abstract This paper develops a tractable framework in which heterogeneity, captured by the distribution of agent characteristics within an alternative (such as a sector, location, or occupation), emerges endogenously in equilibrium through selection rather than being imposed exogenously. I characterize conditions under which widely used extreme-value and power-law distributions arise as equilibrium outcomes of payoff-based discrete choice with multivariate shocks. The framework delivers a one-to-one analytical mapping between equilibrium allocation shares and the distribution of agent characteristics within each alternative. As a result, heterogeneity is endogenously determined in equilibrium through selection. Under counterfactual shocks, this mechanism reshapes heterogeneity and generates adjustment margins absent from standard models. Applications to trade, economic geography, and occupational sorting show how endogenous distributions generate richer counterfactual responses in canonical general-equilibrium settings with minimal structural modifications.
By Sergey Nigai; University of Colorado Boulder
Presented by: Sergey Nigai, University of Colorado Boulder
Session 9: 4-B April 11, 2026 11:00 to 12:30 Location: Journalism 251
Session Chair: William Hauk, University of South Carolina
How Government Procurement affects Trade: Evidence from the U.S. Abstract Government procurement is a major fiscal instrument, yet its implications for international trade remain poorly understood. Using granular U.S. Department of Defense contract data from 2000–2024, I provide the first industry-level evidence on how government spending shapes trade flows. Estimating panel local projections across 375 industries, I find that defense spending leads to modest but persistent increases in imports—accumulating to roughly 29% of initial spending over two years—while exports respond minimally. These effects are concentrated in industries that are defense-intensive and globally integrated, suggesting that transmission operates through supply-chain linkages within the defense industrial base. A network decomposition further shows that upstream procurement shocks generate import responses comparable to direct effects, whereas downstream procurement shocks crowd out exports at longer horizons. These findings highlight that defense spending, while predominantly domestic in nature, generates sizable fiscal leakage through international trade channels.
By Alisha Saini; University of Illinois at Chicago
Presented by: Alisha Saini, University of Illinois at Chicago
The Trade Effects of the Russia–-Ukraine War: Evidence from a Regression Discontinuity in Time Abstract This paper examines the short-run causal impact of the Russia–Ukraine war on international trade by focusing on exports to Russia following the Russia–Ukraine war in February 2022. While a growing literature documents the economic consequences of armed conflict, causal evidence on the immediate trade effects of modern interstate wars remains limited, as many studies rely on descriptive analyses or cross-country panel regressions with identification challenges. To address this gap, we apply a Regression Discontinuity in Time design that exploits the exogenous timing of the war’s onset as a sharp intervention in an otherwise smooth time series. Using monthly bilateral export data from the United Nations Comtrade database and macroeconomic controls from the International Monetary Fund, the analysis estimates whether exports to Russia exhibit a discrete break at the February 2022 cutoff. The high-frequency structure of the data enables precise identification of short-run effects, while country fixed effects and clustered standard errors account for unobserved heterogeneity and serial dependence. The results reveal a large and statistically significant decline in exports to Russia immediately following the war, corresponding to a substantial contraction relative to the pre-war period. This finding is robust across alternative bandwidth choices, functional-form specifications, placebo tests, and augmented estimation strategies. Beyond the average effect, the analysis uncovers heterogeneity across country groups: Sanction-imposing economies experience sharp export contractions, whereas some non-aligned economies exhibit export increases. Overall, the findings show that the Russia–Ukraine war constituted a major structural break in international trade relations, reshaping global trade patterns globally.
By Narek Mirzoyan
Presented by: Narek Mirzoyan,
Mobile Internet Growth and Services Trade Abstract This article studies how internet connectivity, both overall internet use and mobile broadband access, affects international trade, focusing on services. Using data for over 100 countries from 2004 to 2019, we estimate a two-stage structural gravity model linking digital infrastructure to bilateral trade flows. A 10 percent rise in internet use in the importing country raises bilateral services trade by roughly 7 percent, with comparable effects on the exporter side. The strongest responses occur in telecommunications, information technology, finance, and intellectual property services, while the effects on goods trade are modest. Mobile broadband coverage produces similar but somewhat smaller impacts: 2G-and-higher and 3G-and-higher networks both yield positive and significant elasticities, particularly in bandwidth-intensive sectors. These results suggest that expanding both fixed and mobile internet access lowers trade costs and broadens participation in global markets.
By Aerfate Haimiti; University of South Carolina    William Hauk; University of South Carolina    Mohammad Jakaria; University of South Carolina
Presented by: William Hauk, University of South Carolina
Session 10: 4-C April 11, 2026 11:00 to 12:30 Location: Journalism 270
Session Chair: Amy Glass, Texas A&M University
The Trade Effects of "Competitive Liberalization" Agreements Abstract This paper examines the long-term impacts of U.S. preferential trade agreements (PTAs) signed during the George W. Bush administration. We first compare the predictability of these PTAs using a Probit model and find that standard economic, geographic, and political determinants cannot adequately explain the formation of Bush-era PTAs. We then evaluate the trade effects of U.S. PTAs using a structural gravity framework with both traditional and staggered difference-in-differences specifications. Our results show that, while earlier U.S. agreements fostered trade, Bush-era PTAs generated negative net average effects on goods trade, despite substantial heterogeneity across PTA partners. We also find evidence that these agreements increased U.S. exports but failed to raise partners’ exports. By contrast, we find positive but heterogeneous effects on services trade. Finally, we assess the insurance role of these agreements during recent global shocks and find that U.S. PTAs provided some protective effects, although these effects were limited and short-lived. Our findings suggest that both the design and the implementation of competitive liberalization during the Bush administration were flawed, leading to PTA partner choices misaligned with economic fundamentals.
By Russell Hillberry; Purdue University    Hao Xiong; Purdue University
Presented by: Hao Xiong, Purdue University
Integration, Institutions, and Structural Transformation Abstract Market integration is widely expected to raise productivity by reallocating activity toward more productive firms. In many developing economies, however, integration expands trade without generating substantial reallocation or productivity growth. I show that this pattern arises naturally in environments with weak contract enforcement, where relational contracts emerge as a second-best mechanism to sustain exchange. I develop a spatial model of trade and firm selection that explains this pattern when production relies on relationship-based contracting rather than fully enforceable agreements. Firms are heterogeneous and trade across locations connected by an infrastructure network. When contracts are enforceable, lower trade costs generate the standard reallocation response. When enforcement is weak, firms rely on relational contracts that economize on repeated search and bargaining but must be sustained by future surplus. These arrangements raise the productivity threshold required to operate and weaken how selection responds to improved market access, because better connectivity strengthens outside options that discipline incumbent relationships. Crucially, the productivity effects of integration depend not only on how much infrastructure improves, but on how it improves: investments that reshuffle relative access tighten enforcement incentives more strongly than uniform access improvements. In a calibrated general equilibrium, these mechanisms substantially attenuate productivity and welfare gains from integration and can re-rank the returns to alternative infrastructure projects. The model highlights why physical integration and institutional quality are complements, and why infrastructure alone may fail to deliver structural productivity growth.
By Clark Lundberg; San Diego State University
Presented by: Clark Lundberg, San Diego State University
Foreign Direct Investment Selection and Costs in Monopolies Abstract This article examines the determinants and implications of Foreign Direct Investment (FDI) selection for monopoly markets. For firms with differing marginal costs, whether the dominant form of trade costs is unit or iceberg alters choices between exporting and horizontal FDI, and similarly, the dominant form of cost reduction alters choices between domestic production and vertical FDI. Multinational firms are widely accepted as being larger and more productive than firms that only export, but is that always true in theory? Firms wanting to serve a foreign market trade off the fixed cost of establishing production abroad against the trade costs incurred when exporting. A firm chooses horizontal FDI when foreign market sales are large enough (given trade costs and fixed costs). In a monopoly setting, whether trade costs are mainly additive (per-unit) or multiplicative (iceberg) determine whether higher productivity firms have a greater incentive to pick horizontal FDI over exports . For monopolies with linear demand and unit trade costs, Head & Ries (2003) show that, the more productive firms serving the foreign market opt for horizontal FDI. Mukherjee (2010) notes that the usual sorting of higher productivity firms into horizontal FDI can be reversed for iceberg trade costs with linear demand. Mrazova & Neary (2019) provide an overarching analysis, noting that sorting between FDI and exports is less robust than decisions whether to enter the foreign market at all. They use linear demand with iceberg trade costs as an example where monopolists with intermediate marginal costs might pursue FDI rather than those with the lowest costs. Unit trade costs add a constant cost per unit shipped, such as transport fees or specific tariffs, while iceberg trade costs are proportional to the value of exports, such as ad valorem tariffs or damage/waste/loss in transit. Irazzazabal et al (2015) observe that both forms of trade costs are apt to be present. Under linear demand, these two types of trade costs have markedly different effects on which firms are most inclined to use FDI to serve markets abroad. Consider a scenario where the fixed costs of FDI are falling over time. When unit trade costs are predominant, lower-marginal-cost firms opt for horizontal FDI first (at higher fixed cost thresholds) because their greater output amplifies the savings from avoiding unit trade costs. In contrast, when iceberg trade costs are predominant, the sorting pattern inverts: higher- (or intermediate-) marginal-cost firms prefer horizontal FDI as their profits from exporting decline more sharply with increasing marginal costs, making the variable cost savings from FDI more valuable for firms with higher costs. For unit trade costs, the fixed cost threshold at which a firm is indifferent between exporting and FDI - defined by the difference in variable costs multiplied by total output declines with marginal cost, favoring more productive firms in the FDI selection process. However, with iceberg trade costs, the fixed cost threshold can initially increase with marginal cost before reversing, introducing the possibility of a non-monotonic sorting pattern where moderate-cost firms may have the strongest incentives for FDI. With linear demand, selection of lower marginal cost monopolists into horizontal FDI hinges on unit trade costs being the primary form of trade costs – sufficiently large iceberg trade costs can reverse the pattern. Observed FDI patterns could differ depending on the dominant type of trade cost faced by firms. For instance, increases in unit trade costs lead to new investment abroad by lower-cost firms than those that remain exporters (although higher cats than existing FDI). Increases in iceberg trade costs also lead to new investment abroad, but it may be done by firms with higher cost than those that remain exporters. Similar possibilities regarding selection patterns arise for vertical FDI, where firms shift production abroad to reduce marginal costs (when serving both markets without trade costs), if the cost savings are worth the additional fixed costs of building a foreign plant. As for the case of horizontal FDI, the nature of cost reductions (whether per-unit or proportional) determines which firms benefit most from vertical FDI. Per-unit savings in production costs mimic the selection patterns found with unit trade costs: firms that have low marginal costs (of producing at home) adopt vertical FDI first as fixed costs fall. Conversely, proportional savings (such as wage-based cost reductions) yield selection patterns for vertical FDI akin to the iceberg trade cost case for horizontal FDI, often favoring higher- or intermediate-cost firms that stand to gain the most from vertical FDI. The analysis for vertical FDI aligns with Head and Ries (2003) finding that the usual sorting might be upset if costs are lower in the foreign country. Their empirical analysis of exporting and FDI decisions by Japanese firms indicates that entry into lower cost markets may be done by low productivity firms. FDI promotion policies and incentives provided by host countries (such as subsidies or tax breaks) can affect the sorting of firms into vertical FDI versus domestic production. This sorting is sensitive to the form cost savings take. Host country policies that reduce the marginal costs of multinational firms on a per-unit versus proportional basis can attract different types of firms in terms of their marginal costs. In summary, whether lower-cost firms are selected into horizontal or vertical FDI in monopoly settings depends on details of cost structures. Swapping iceberg for unit trade costs alters selection into horizontal FDI, while swapping proportional for per-unit cost savings alters selection into vertical FDI. These findings provide insights for policymakers seeking to attract FDI and researchers designing empirical studies of multinational firm behavior. Further research addresses whether these findings for monopolies extend to duopolies.
By Amy Glass; Texas A&M University
Presented by: Amy Glass, Texas A&M University
Session 11: 5 April 11, 2026 14:15 to 15:45 Location: Journalism 251
Session Chair: James Lake, University of Tennessee
From Protection to Retaliation: The Welfare Cost of Tariffs Abstract This paper explores the welfare costs of trade impediments, which depend on trade elasticities. State-of-the-art literature uses tariffs as an instrument to structurally identify them. Papers using Trump tariffs in the US estimate modest elasticities, implying low welfare costs. In this paper, I build a two-country model of political economy to explain these results and introduce a novel identification strategy to estimate elasticities. The model features a selection mechanism for goods subject to tariffs, based on the government’s objective function and the state of the economy. When raising revenue, the government imposes tariffs on sectors with low demand elasticity. In response, the other country retaliates by targeting goods with high demand elasticity to maximize economic harm on the trade partner. This provides a framework for two possible instruments: protectionist and retaliatory tariffs. As trade policy targets the extremes of the demand elasticity distribution, Trump’s protectionism aligns with modest elasticity estimates of the lower bound. Using administrative data from Canadian imports, I employ the 2018 retaliatory tariffs against the US as an instrument to estimate the elasticities corresponding to the upper bound. I find the demand elasticity for imports ranges between 2.5 and 5.2, while the supply elasticity of exports is zero. This suggests that welfare costs could double, reaching up to $22 billion.
By Cristian Espinosa; University of Houston
Presented by: Cristian Espinosa, University of Houston
Specialize or Innovate? Product Scope Adjustment and Productivity Growth under Competition Abstract How do multiproduct firms adjust their product scope under rising competition? This paper studies South Korean manufacturers exposed to heightened competition from new EU member states following EU enlargement. Consistent with standard models, firms respond by reducing product scope and reallocating resources to core products. However, contrary to prior predictions, we observe an overall decline in productivity. To understand this pattern, we analyze firm heterogeneity and identify two offsetting mechanisms. First, the well-known product specialization channel---focusing on core products---can raise productivity. Second, a product addition channel emerges: firms with strong innovation capabilities develop new high-productivity products. This highlights an often-overlooked form of heterogeneity---knowledge. We develop a theoretical model extending standard frameworks, which predicts that: (1) competition does not always raise productivity; (2) product specialization can increase productivity; (3) innovation-driven product addition can also improve productivity, especially for high-knowledge firms; and (4) responses of high-knowledge firms differ from those of high-productivity firms. While standard models explain (2), our framework accounts for all four patterns observed in the data.
By Jung Hur; Sogang University    Manho Kang; Georgia Institute of Technology    Hyojin Kwak; Sogang University
Presented by: Manho Kang, Georgia Institute of Technology
Regulatory Delay, Uncertainty, and the Cost of Foreign Investment Screening Abstract Many countries screen foreign direct investment through discretionary approval regimes that operate primarily through delay rather than outright prohibition. Since few transactions are ultimately blocked, Governments argue that this flexibility makes screening “light touch”. We show that this view is incomplete. When approval is costly to reverse and information arrives over time, screening functions as a real option: regulatory delay creates uncertainty that is capitalized into asset prices during review. Using Australian data, we estimate that target firms experience a valuation discount of around 20% of expected transaction surplus during screening. Aggregated across transactions, the implied losses are several times larger than standard estimates of goods-trade barriers and increase sharply once deterred deals are included. Screening also generates spillovers to rival firms and persistent costs through repeated review of subsequent acquisitions by foreign-owned firms. While most costs fall domestically, Chinese investors experience significant valuation effects.
By Phillip McCalman; University of Melbourne
Presented by: Phillip McCalman, University of Melbourne
Session 12: 6 April 11, 2026 16:15 to 17:45 Location: Journalism 251
Session Chair: James Lake, University of Tennessee
Climate induced Congestion in Ports: General Equilibrium Consequences on Transportation and Trade Abstract This paper studies the impact of climate change on ports and its consequences for maritime transportation and international trade. Rising sea levels and associated weather events threaten port operations in a spatially heterogeneous way. Because container shipping operates as a global network, local disruptions propagate, creating spillovers that also affect ports not directly exposed. I combine high-frequency data on shipping and marine weather to estimate how adverse conditions reduce port efficiency and raise transportation costs. I embed these estimates in a trade model with networked shipping and endogenous port congestion, allowing me to compute counterfactuals. Using climate projections of sea-level rise, I quantify the welfare effects of increasing maritime transportation costs. By 2100, ports are projected to experience water-level increases of up to 1.3 meter, leading to losses of up to 1.1% in real output. A port’s welfare loss arises not only from its own exposure to rising water levels (direct effect), but also from spillovers generated by sea-level rise at other ports (indirect effect). As a result, I show that even ports facing no local increase in water levels will suffer welfare losses due to global sea level rise.
By Jeanne Astier; CREST - IP Paris
Presented by: Jeanne Astier, CREST - IP Paris
Exports, Labor Markets, and the Environment: Evidence from Brazil Abstract What is the environmental impact of exports? Focusing on 2000–20, this paper combines customs, administrative, and census microdata to estimate employment elasticities with respect to exports. The findings show that municipalities that faced increased exports experienced faster growth in formal employment. The elasticities were 0.25 on impact, peaked at 0.4, and remained positive and significant even 10 years after the shock, pointing to a long and protracted labor market adjustment. In the long run, informal employment responds negatively to export shocks. Using a granular taxonomy for economic activities based on their environmental impact, the paper documents that environmentally risky activities have a larger share of employment than environmentally sustainable ones, and that the relationship between these activities and exports is nuanced. Over the short run, environmentally risky employment responds more strongly to exports relative to environmentally sustainable employment. However, over the long run, this pattern reverses, as the impact of exports on environmentally sustainable employment is more persistent.
By Carlos Goes; World Bank Group
Presented by: Carlos Goes, World Bank Group
Trade Wars Begin in Boardrooms: How Chinese Competition Pulled Corporate America Toward Protectionism Abstract Why can economic ties sometimes breed conflict rather than cooperation? This paper addresses the question by examining how rising Chinese import competition affects U.S. corporate political activity and, in turn, reshapes lawmaking and trade policy. I find that U.S. companies more exposed to Chinese competition spend significantly more on lobbying against U.S.–China engagement and are more likely to initiate campaign contributions to legislators with whom they had no prior contribution ties. These effects intensify after the onset of the trade war. The impact on new contribution ties is particularly pronounced among legislators with prior records of opposing U.S.–China engagement, consistent with the selection channel of corporate political influence. At the same time, new contribution ties make legislators more likely to sponsor or cosponsor anti-engagement legislation, consistent with the persuasion channel of corporate political influence. Anti-engagement lobbying ultimately translates into protectionist outcomes: higher U.S. tariffs on competing Chinese imports and ultimately a reduction in Chinese competition faced by exposed firms. Overall, the findings highlight how economic shocks can endogenously trigger corporate political mobilization, extending the “Protection for Sale” framework to dynamic firm-level responses with lasting policy consequences.
By Haoran Gao; University of Chicago
Presented by: Haoran Gao, University of Chicago
Session 13: 7-A April 12, 2026 9:00 to 10:30 Location: Journalism 239
Session Chair: Georg Schaur, University of Tennessee
Firm Sorting without Agglomeration Abstract This paper develops a neoclassical theory of firm spatial sorting in which more productive firms locate in larger cities even in the absence of agglomeration externalities or market frictions. The core mechanism operates through relative factor prices: when labor and intermediate inputs are complements and productivity is labor-augmenting, spatial variation in wages gives rise to a unique pure-sorting equilibrium with spatial positive assortative matching. The resulting market equilibrium is efficient. The framework is then extended to incorporate agglomeration externalities and to characterize optimal place-based policy, showing that pecuniary sorting dampens optimal subsidies and introduces a progressive force. Using Chinese firm-level tax data, key technology parameters are estimated and shown to lie in the region consistent with the model’s sorting predictions. Quantitatively, relative price mechanism alone account for approximately 40% of observed firm spatial sorting in the data.
By Mai Wo    Seung-Yong Yoo
Presented by: Mai Wo,
Incidence of Real Value Added in Production Networks Abstract This paper introduces decompositions and sufficient statistics that capture how microeconomic shocks have heterogeneous effects on firms' real value-added in production network economies with household heterogeneity and rent-generating distortions. The literature has studied decompositions for country-level real output under restrictions on the distribution of profits and factoral reallocation. My results allow for general equity and factoral market structures and constitute the first general decomposition for any cluster of firms (e.g., a firm, a sector, a region, or a country). I use these results in two ways: first, theoretically, I show measures of comovement in real value-added across countries and firms in a simple economy for the semiconductor global supply chain, and second, empirically, by replicating measures of country-level real output using granular sources of variation.
By Alejandro Rojas Bernal; University of Hawai'i at Manoa
Presented by: Alejandro Rojas Bernal, University of Hawai'i at Manoa
Time as an Endogenous Transportation Cost: Scale vs. Congestion in Global Container Shipping Abstract Shipping time is a key component of transportation costs and an essential determinant of global supply chain performance. Yet most trade and transportation analyses either ignore shipping time, treat it as exogenous, or focus on congestion as the primary source of time variation. We find that shipping time falls with trade volume: scale economies in service frequency and direct routing dominate congestion on net. We provide direct micro evidence and causally estimate how realized container flows on an origin–destination port pair affect end-to-end shipping time, showing that shipping time is not a fixed iceberg cost but an equilibrium outcome of routing and scheduling in hub-and-spoke liner networks. We combine two new micro datasets of container journeys with event-level timestamps that allow direct measurement of end-to-end shipping time and routing from origin to destination ports: (i) a global cross section of 1.3 million journeys across 521 ports (2021–2022) from a large ocean carrier, and (ii) a port-pair panel of 7 million journeys for U.S. imports (2018–2023) from another major carrier. These data open the black box of shipping time by measuring total duration and transshipment choices at the container level. We develop a conceptual framework of shipping-time technology to guide the empirical specifications. Empirically, we estimate a port-pair-by-year panel 2SLS with port-pair and time fixed effects. We instrument for port-pair container flows (TEU) using a shift–share design that interacts global HS-level demand shocks with predetermined exposure shares based on port catchment areas and historical trade structure. Doubling container flows between two ports reduces total shipping time by 2.5% and raises the probability of direct service by 3.2 percentage points. Mapping the implied time savings into standard value-of-time tariff equivalents (following Hummels and Schaur, 2013) implies a 0.5–1.6 percentage-point reduction in the ad-valorem time wedge per doubling. A complementary cross-sectional design using a geography-based network-centrality instrument shows that more central lanes are substantially more likely to be served directly. These results imply that international container shipping operates in a decreasing-cost region of the cost–volume relationship, in contrast to settings where congestion dominates. Treating shipping time as endogenous changes measurement and policy evaluation: trade shocks, tariffs, and port or infrastructure investments that shift volumes alter not only prices but also the temporal component of trade costs via routing and scheduling.
By Xiang Liu; University of Minnesota
Presented by: Xiang Liu, University of Minnesota
Session 14: 7-B April 12, 2026 9:00 to 10:30 Location: Journalism 251
Session Chair: James Lake, University of Tennessee
Learning in Firm-to-Firm Trade Abstract We study how firms’ productivity growth depends on the productivity of their suppliers and buyers and examine the aggregate implications of this form of learning. Using data on firm-to-firm transactions in Belgium, we document evidence consistent with learning from both suppliers and buyers, particularly from the most productive ones. To study the implications of this form of learning in general equilibrium, we develop a model in which firm productivity growth is shaped by the productivity of an endogenously formed network of suppliers and buyers, where firms bargain over the surpluses from trade and learning. Learning between suppliers and buyers increases bilateral trade volumes: suppliers charge lower markups when they learn more from buyers, and buyers have higher demand when they learn more from suppliers. We estimate a small open economy model with firms learning from both domestic and foreign trading partners. Quantitatively, we find that the value of learning is equivalent to 19 percent of aggregate consumption. Welfare gains from reductions in international trade participation costs are underestimated by over 7 percent without learning. Gains from trade are amplified when foreign partners are more productive through productivity catch-up and network upgrading, but are dampened when less productive foreign firms crowd out domestic learning and weaken incentives to form productive relationships.
By Xianglong Kong; University of Chicago    Emmanuel Dhyne; National Bank of Belgium
Presented by: Xianglong Kong, University of Chicago
Firm-level Complementarity in the Armington Elasticity and Aggregate Implications Abstract I provide novel plant-level estimates of the elasticity of substitution between domestic and foreign suppliers within an input. Using rich Indian plant data that report input purchases separately by domestic and imported sources, I estimate an elasticity of 0.51, which implies complementarity between foreign and domestic sourcing. I show aggregation bias in elasticity by aggregating the same data across plants and estimating a higher elasticity. I provide conditions under which ignoring firm heterogeneity can cause this bias and show these conditions hold in my setting. I quantify the importance of this elasticity using an input-output general equilibrium model with product-level linkages. I show that complementarity substantially amplifies the aggregate effects of foreign shocks and alters the gains from removing distortions in input sourcing. The additional micro-to-macro amplification or attenuation through the complementarity depends on the origin of the micro shock. Finally, I show that suppressing firm heterogeneity in imports considerably amplify the additional GDP impact under complementarity.
By Anmol Agarwal; University of Virginia
Presented by: Anmol Agarwal, University of Virginia
Who Pays for Sanctions? The Regional Labor Market Effects in Iran Abstract We examine the distributional consequences of sanctions on local labor markets in Iran. First, we find that the discontinuation of SWIFT in March 2012 caused a large decline in Iran’s manufacturing trade flows, sharply reducing both its imports and exports by around 50% by 2015. We show that the decline is both in values and in number of varieties, and covers almost all sectors and types of products. To examine the effect of sanctions at the level of counties, we use labor force surveys from Iran, proxying a county’s exposure to sanctions by its initial sectoral composition. Our empirical analysis shows sharp geographical inequality in who bears sanction costs. Regions with industries that relied on exports suffered the greatest in terms of job losses between 2011 and 2015. We also find that counties with industries that relied on imported intermediates experienced declines in employment, whereas counties that harbored import-competing industries had negligible employment gains. We find no wage adjustments or labor reallocation across regions, indicating that costs concentrate on workers in specific trade–exposed areas.
By Maarten Bosker; Erasmus University Rotterdam    Mohammad Hossein Dehghani; University of Tehran    Julian Emami Namini; Erasmus University Rotterdam    Aksel Erbahar; Erasmus School of Economics
Presented by: Julian Emami Namini, Erasmus University Rotterdam
Session 15: 8-A April 12, 2026 11:00 to 12:30 Location: Journalism 239
Session Chair: Georg Schaur, University of Tennessee
Beyond Borders: Impacts of the Plastic Waste Trade in Indonesia Abstract Global plastic waste generation has risen sharply over the past two decades, while recycling rates remain below 9%. As a result, high-income countries have exported waste to low- and middle-income countries with weaker regulatory capacity. This study investigates the environmental consequences of the abrupt reorientation of global plastic waste flows following China’s 2018 National Sword Policy, which restricted plastic waste imports and redirected large volumes to Southeast Asia. Employing a quasi-experimental design, the analysis leverages spatial and temporal variation in exposure to waste sites and deep-sea ports to estimate the impact of increased plastic waste imports on fine particulate matter (PM2.5) across Indonesia, a receiving country heavily affected by these inflows. The empirical strategy integrates satellite-based PM2.5 measurements, machine-learning–identified waste facilities, trade data, and port locations. The difference-in-differences estimates show that PM2.5 concentrations increase by roughly 7–8 percent in areas within 3 km of waste sites relative to locations farther away, with effects that attenuate quickly with distance. Additionally, when port proximity is included in the model, pollution increases are concentrated in cells that are both near waste sites and deep-sea ports handling imported plastic. These results provide causal evidence of cross-border pollution leakage generated by global plastic waste trade and highlight the distributional consequences of unilateral environmental policies. The findings underscore the need for stronger regulation and enforcement in waste-receiving countries and for international coordination to ensure that efforts to improve environmental quality in one jurisdiction do not exacerbate environmental injustice elsewhere.
By Monica Shandal; UCSC
Presented by: Monica Shandal, UCSC
Managerial Strategies and Resilience to Supply Chain Shocks Abstract This paper leverages detailed firm-level survey responses from the European Investment Bank and ORBIS balance sheet data to examine the impact of supply chain disruptions on firm performance and the strategic responses of managers to adverse shocks. Using a multi-stage empirical approach, we show that strategic supply-chain management significantly enhances firms’ resilience to disruption. First, while the COVID-19 shock exerted a negative and persistent drag on performance, firms that adopted adaptation strategies—especially inventory stockpiling and the digitalization of supply-chain management—substantially mitigated its impact. Second, despite experiencing disruptions, managers largely maintained engagement in international trade, with evidence of shifts toward near-shoring and broader diversification rather than reshoring, and with more resilient firms expanding product ranges and EU export destinations, underscoring increased reliance on the Single Market. Third, although stockpiling and supplier diversification create short-term financial pressure, these strategies later ease financial constraints during disruptions, while supply-chain digitalization, despite limited immediate financial relief, improves managers’ expectations of future financial conditions, likely reflecting both delayed productivity gains and enhanced transparency for lenders.
By Thomas Rowley; Università Bocconi    Giorgio Presidente; Bocconi University    Carlo Altomonte; Universita' Bocconi    Christoph Weiss; European Investment Bank
Presented by: Thomas Rowley, Università Bocconi
Adapting to Foreign Standards: Technical Barriers to Trade and the Geography of US Emissions Abstract Technical Barriers to Trade (TBTs) aim to correct market failures and serve public policies, yet their environmental consequences are ambiguous as compliance can promote greener production or impose adjustments that increase pollution. In this paper, we estimate the impact of foreign TBTs on regional pollution emissions in the US. Combining data on TBT adoption by US export destinations, bilateral trade flows, and local industrial composition and emissions, we find that increased TBT exposure raises county-level emissions for sulfur dioxide, particulate matter, and volatile organic compounds. Our results suggest that adaptation costs dominate environmental improvements, particularly for standards not harmonized with US domestic regulations. In contrast, exposure to foreign tariffs reduces emissions, showing that non-tariff measures and traditional trade barriers have distinct environmental consequences. Our findings highlight how trade policy instruments affect the environment for policymakers seeking to balance openness, sustainability, and effective regulatory standards.
By Sergio Rocha; Monash University    Prakrati Thakur; Rensselaer Polytechnic Institute
Presented by: Prakrati Thakur, Rensselaer Polytechnic Institute
Session 16: 8-B April 12, 2026 11:00 to 12:30 Location: Journalism 251
Session Chair: James Lake, University of Tennessee
Trade in Niches, Markups, and Firm Sorting in General Equilibrium Abstract This paper studies the implications of niche consumption for the behavior of heterogeneous firms and for the distributional effects of trade. I propose a general equilibrium model with heterogeneous firms that choose among various market segments (“niches”) within a differentiated sector. In equilibrium, larger niches feature higher competition driven by lower local prices. Positive assortative matching between niche size and firm productivity is driven by the demand side and implies that more productive firms endogenously sort into more competitive niches. It generates a U–shaped equilibrium relationship between markups and both niche and firm size. Trade induces higher competition in all niches and an unambiguous shift in the matching function that features tougher selection. As a result, niche-specific markups may increase in response to more competition. I find that while consumers in mid-sized niches gain the most from trade, consumers in larger niches gain relatively less and may even bear welfare losses. The impact of small changes in trade costs is also highly uneven across consumers: niches previously unexposed to trade are those that lose from small reductions in trade costs. The sorting effect is sizable for most niches and contributes up to 59% of the total welfare gains for mid-sized niches. In contrast to costly trade patterns, gains from free trade are positive and monotonically decreasing in niche size. I also show that while Marshall’s Second Law of Demand is a necessary and sufficient condition for positive sorting under many popular classes of preferences, it is actually neither necessary nor sufficient under the generalized Gorman-Pollak demand system.
By Shamil Sharapudinov; University of Toronto
Presented by: Shamil Sharapudinov, University of Toronto
Firm-Level Origins of TariffPass-Through: Importer Heterogeneity and Welfare Decomposition Abstract We develop a decomposition framework and use condential U.S. Census data to show that pass-through to U.S. import prices during the U.S.-China trade dispute is incomplete among rms that continue importing the same products from the same countries. Previous ndings of complete pass-through re ect a reallocation of imports toward higher-price rms and costlier new supplier relationships within product{country markets. We then build a model with rm-level import prices and sourcing strategies and estimate that most welfare losses arise from extensive-margin eects on the import price index, driven by sourcing adjustments and overlooked in previous welfare calculations.
By Chengyuan He; Xiamen University    Chang Liu; Stony Brook University    Xiaomei Sui; University of Hong Kong    Soo Kyung Woo; Sejong University
Presented by: Chang Liu, Stony Brook University
Digging Up the Value Chain: Mineral Export Restrictions and Industrial Upgrading Abstract This paper studies mineral export restrictions as an instrument of industrial policy. I develop a general equilibrium model in which export restrictions lower domestic mineral prices and implicitly subsidize downstream manufacturing. Welfare gains, however, require the activation of scale externalities in downstream sectors, except when the restricting country has substantial market power in mineral markets. Using a novel global dataset of mineral export restrictions combined with product-level upstream-downstream linkages, I show that this condition is largely unmet. While downstream exports rise in both value and quantity following restrictions, these gains dissipate rapidly along the value chain and are confined to basic metal products, the immediate downstream sector. There is no significant export-stimulating effect for technologically complex goods or products that rely on extensive complementary inputs. Overall, mineral export restrictions can generate sector-specific downstream gains but are insufficient to induce the broad-based industrial upgrading that many developing country governments envision.
By Qingyu Chen; University of Oxford
Presented by: Qingyu Chen, University of Oxford

 

This program was last updated on 2026-03-23 11:04:37 EDT