Advertisement

IMF Economic Review

, Volume 67, Issue 4, pp 703–745 | Cite as

The Great Recession and a Missing Generation of Exporters

  • William F. LincolnEmail author
  • Andrew H. McCallum
  • Michael Siemer
Research Article
  • 54 Downloads

Abstract

We study the impact of foreign market entry and exit by firms on the trajectory of U.S. exports during and after the Great Recession. Using confidential microdata from the U.S. Census Bureau, we find that incumbent exporters were primarily responsible for the changes in aggregate foreign sales during these years. While there was a substantial decline in the number of firms that sold abroad in the midst of the crisis, new exporters during the recovery compensated for this by having larger foreign sales. Thus, while changes in foreign market participation drove substantial shifts in the variety of U.S. goods that were exported, overall they were less important for the trajectory of total foreign sales over time.

Keywords

Great recession Business cycles Exports Entry Exit Firm dynamics 

JEL Classification

F10 F40 E32 E44 J2 

Notes

Acknowledgements

Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau, the Board of Governors of the Federal Reserve System, or any other person associated with the Federal Reserve System. All results have been reviewed to ensure that no confidential information is disclosed. We thank George Alessandria, Lukasz Drozd, Matt Freedman, Fariha Kamal, Kei-Mu Yi, Jing Zhang, and participants at the IMF conference “Globalization in the Aftermath of the Crisis” for helpful suggestions. We also thank the staff at the U.S. Census Bureau, particularly Joelle Abramowitz, Clint Carter, Chris Galvan, Bert Grider, Maggie Levenstein, Stephanie A. Pullés, Danielle Vesia, and William Wisniewski. Jessica C. Liu, Noah P. Mathews, Michael A. Navarrete, and Victoria Perez-Zetune provided excellent research assistance. Support for this research at the University of Michigan Research Data Center from NSF(ITR-0427889) is also gratefully acknowledged.

References

  1. Adelino, Manuel, Antoinette Schoar, and Felipe Severino. 2015. House Prices, Collateral, and Self-Employment. Journal of Financial Economics 117(2): 288–306.Google Scholar
  2. Amiti, Mary, and David Weinstein. 2011. Exports and Financial Shocks. Quarterly Journal of Economics 126(4): 1841–1877.Google Scholar
  3. Arellano, Manuel. 2003. Panel Data Econometrics. Oxford: Oxford University Press.Google Scholar
  4. Arellano, Manuel, and Stephen Bond. 1991. Some Tests of Specification for Panel Data: Monte Carlo Evidence and An Application to Employment Equations. Review of Economic Studies 58(2): 277–297.Google Scholar
  5. Aslam, Aqib, Emine Boz, Eugenio Cerutti, Marcos Poplawski-Ribeiro, and Petia Topalova. 2018. The Slowdown in Global Trade: A Symptom of a Weak Recovery? IMF Economic Review 66(3): 440–479.Google Scholar
  6. Baldwin, Richard. 2011. The Great Trade Collapse: Causes, Consequences and Prospects. In The Great Trade Collapse: Causes, Consequences and Prospects, ed. Richard Baldwin, A VoxEU.org publication. London: Centre for Economic Policy Research.Google Scholar
  7. Baldwin, Richard, and Paul Krugman. 1989. Persistent Trade Effects of Large Exchange Rate Shocks. Quarterly Journal of Economics 104(4): 635–654.Google Scholar
  8. Barresse, Glenn, Fariha Kamal, Javier Miranda, and Wei Ouyang. 2016. “Business Dynamics of U.S. Exporters: Integrating Trade Transactions Data with Business Administrative Data. Technical report. Washington, DC: U.S. Census Bureau.Google Scholar
  9. Behrens, Kristian, Gregory Corcos, and Giordano Mion. 2013. Trade Crisis? What Trade Crisis? Review of Economics and Statistics 95(2): 702–709.Google Scholar
  10. Bernard, Andrew, and J. Bradford Jensen. 1999. Exceptional Exporter Performance: Cause, Effect, or Both? Journal of International Economics 47(1): 1–25.Google Scholar
  11. Bernard, Andrew, and J. Bradford Jensen. 2004. Why Some Firms Export. Review of Economics and Statistics 86(2): 561–569.Google Scholar
  12. Bernard, Andrew, J. Bradford Jensen, Stephen Redding, and Peter Schott. 2009. The Margins of US Trade. American Economic Review 99(2): 487–493.Google Scholar
  13. Bernard, Andrew, J.Bradford Jensen, and Peter Schott. 2009. Importers, Exporters and Multinationals: A Portrait of Firms in the U.S. that Trade Goods. In Producer Dynamics: New Evidence from Micro Data, ed. Timothy Dunne, J.Bradford Jensen, and Mark J. Roberts. Chicago, IL: National Bureau of Economic Research.Google Scholar
  14. Blinder, Alan, and Alan Krueger. 2013. Alternative Measures of Offshorability: A Survey Approach. Journal of Labor Economics 31(S1): S97–S128.Google Scholar
  15. Blum, Bernardo, Sebastian Claro, and Ignatius Horstmann. 2013. Occasional and Perennial Exporters. Journal of International Economics 90(1): 65–74.Google Scholar
  16. Blundell, Richard, and Stephen Bond. 1998. Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics 87(1): 115–143.Google Scholar
  17. Bogin, Alexander, William Doerner, and William Larson. 2019. Local House Price Dynamics: New Indices and Stylized Facts. Real Estate Economics 47(2): 365–398.Google Scholar
  18. Bricongne, Jean-Charles, Lionel Fontagné, Guillaume Gaulier, Daria Taglioni, and Vincent Vicard. 2012. Firms and the Global Crisis: French Exports in the Turmoil. Journal of International Economics, 87(1): 134–146. (Symposium on the Global Dimensions of the Financial Crisis).Google Scholar
  19. Cabrillac, Bruno, Alexander Al-Haschimi, Oxana Babeck Kucharukov, Alessandro Borin, Matthieu Bussire, Raphael Cezar, Alexis Derviz, Dimitra Dimitropoulou, Laurent Ferrara, and Gchter. 2016. Understanding the Weakness in Global Trade—What is the New Normal? Occasional Paper Series (European Central Bank).Google Scholar
  20. Cameron, Colin, and Douglas Miller. 2015. A Practitioners Guide to Cluster-Robust Inference. Journal of Human Resources 50(2): 317–372.Google Scholar
  21. Cetorelli, Nicola, and Philip Strahan. 2006. Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local US Markets. Journal of Finance 61(1): 437–461.Google Scholar
  22. Clementi, Gian Luca, Aubhik Khan, Berardino Palazzo, and Julia Thomas. 2014. Entry, Exit and the Shape of Aggregate Fluctuations in a General Equilibrium Model with Capital Heterogeneity. Working paper (Ohio State University).Google Scholar
  23. di Giovanni, Julian, and Andrei Levchenko. 2010. Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement. American Economic Journal: Macroeconomics 2(2): 95–124.Google Scholar
  24. di Giovanni, Julian, Andrei Levchenko, and Isabelle Mejean. 2014. Firms, Destinations, and Aggregate Fluctuations. Econometrica 82(4): 1303–1340.Google Scholar
  25. Dixit, Avinash. 1989. Entry and Exit Decisions Under Uncertainty. Journal of Political Economy 97(3): 620–638.Google Scholar
  26. Duygan-Bump, Burcu, Alex Levkov, and Judit Montoriol-Garriga. 2015. Financing Constraints and Unemployment: Evidence from the Great Recession. Journal of Monetary Economics 75: 89–105.Google Scholar
  27. Eaton, Jonathan, and Samuel Kortum. 2001. Trade in Capital Goods. European Economic Review 45(7): 1195–1235.Google Scholar
  28. Eaton, Jonathan, Samuel Kortum, Brent Neiman, and John Romalis. 2016. Trade and the Global Recession. American Economic Review 106(11): 3401–3438.Google Scholar
  29. Gopinath, Gita, and Brent Neiman. 2014. Trade Adjustment and Productivity in Large Crises. American Economic Review 104(3): 793–831.Google Scholar
  30. Gourio, François, Todd Messer, and Michael Siemer. 2016. Firm Entry and Macroeconomic Dynamics: A State-Level Analysis. American Economic Review 106(5): 214–218.Google Scholar
  31. Groot, Stefan, Jan Möhlmann, Harry Garretsen, and Henri de Groot. 2011. The Crisis Sensitivity of European Countries and Regions: Stylized Facts and Spatial Heterogeneity. Cambridge Journal of Regions, Economy and Society 4(3): 437–456.Google Scholar
  32. Hahn, Jinyong, and Hyungsik Roger Moon. 2006. Reducing Bias of MLE in a Dynamic Panel Model. Econometric Theory 22(3): 499–512.Google Scholar
  33. Heckman, James. 1981. The Incidental Parameters Problem and the Problem of Initial Conditions in Estimating a Discrete Time-Discrete Data Stochastic Process and Some Monte Carlo Evidence. In Structural Analysis of Discrete Data and Econometric Applications, ed. Charles F. Manski, and Daniel L. McFadden. Cambridge, MA: MIT Press.Google Scholar
  34. Hicks, John. 1969. A Theory of Economic History. Oxford: Oxford University Press.Google Scholar
  35. Jarmin, Ron and Javier Miranda. 2002. The Longitudinal Business Database. Working papers (U.S. Census Bureau, Center for Economic Studies).Google Scholar
  36. Jensen, J.Bradford. 2011. Global Trade in Services: Fear, Facts, and Offshoring. Washington, DC: Peterson Institute for International Economics.Google Scholar
  37. Kamal, Fariha and Cornell Krizan. 2012. Decomposing Aggregate Trade Flows: New Evidence from U.S. Traders. Working Paper No. 12-17 (Center for Economic Studies, U.S. Census Bureau).Google Scholar
  38. Kee, Hiau Looi, Cristina Neagu, and Alessandro Nicita. 2013. Is Protectionism on the Rise? Assessing National Trade Policies during the Crisis of 2008. Review of Economics and Statistics 95(1): 342–346.Google Scholar
  39. Lane, Philip, and Gian Maria Milesi-Ferretti. 2011. The Cross-Country Incidence of the Global Crisis. IMF Economic Review 59(1): 77–110.Google Scholar
  40. Lee, Yoonseok and William Lincoln. 2019. Exporting and Firm Value. Mimeo (Claremont McKenna College).Google Scholar
  41. Levchenko, Andrei, Logan Lewis, and Linda Tesar. 2010. The Collapse of International Trade During the 2008–09 Crisis. In Search of the Smoking Gun. IMF Economic Review 58(2): 214–253.Google Scholar
  42. Lewis, Logan, Ryan Monarch, Michael Sposi, and Jing Zhang, 2019. Structural Change and Global Trade. Working paper (Federal Reserve Bank of Chicago).Google Scholar
  43. Lin, Jenny, and William Lincoln. 2017. Pirate’s Treasure. Journal of International Economics 109(1): 235–245.Google Scholar
  44. Lincoln, William. 2012. Review of Global Trade in Services: Fear, Facts, and Offshoring. Journal of Economic Literature 50(2): 524–525.Google Scholar
  45. Lincoln, William, and Andrew McCallum. 2018. The Rise of Exporting by U.S. Firms. European Economic Review 102(1): 280–297.Google Scholar
  46. McCallum, Andrew, 2019. The Structure of Export Entry Costs. mimeo (Board of Governors of the Federal Reserve System).Google Scholar
  47. Mian, Atif, and Amir Sufi. 2011. House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis. American Economic Review 101(5): 2132–2156.Google Scholar
  48. Nickell, Stephen. 1981. Biases in Dynamic Models with Fixed Effects. Econometrica 49(6): 1417–1426.Google Scholar
  49. Rajan, Raghuram, and Luigi Zingales. 1998. Financial Dependence and Growth. American Economic Review 88(3): 559–586.Google Scholar
  50. Roberts, Mark, and James Tybout. 1997. The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs. American Economic Review 87(4): 545–564.Google Scholar
  51. Schmalz, Martin, David Sraer, and David Thesmar. 2017. Housing Collateral and Entrepreneurship. Journal of Finance 72(1): 99–132.Google Scholar
  52. Siemer, Michael. 2019. Employment Effects of Financial Constraints During the Great Recession. Review of Economics and Statistics 101(1): 16–29.Google Scholar
  53. Yi, Kei-Mu. 2011. The Collapse of Global Trade: The Role of Vertical Specialization. In The Collapse of Global Trade, Murky Protectionism and the Crisis: Recommendations for the G20, ed. Richard Baldwin, and Simon Evenett, VoxEU.Org Books. London: Centre for Economic Policy Research.Google Scholar

Copyright information

© International Monetary Fund 2019

Authors and Affiliations

  • William F. Lincoln
    • 1
    Email author
  • Andrew H. McCallum
    • 2
  • Michael Siemer
    • 2
  1. 1.Robert Day SchoolClaremont McKenna CollegeClaremontUSA
  2. 2.Board of Governors of the Federal Reserve SystemWashingtonUSA

Personalised recommendations