Publications

Forthcoming
Antras, Pol, Evgenii Fadeev, Teresa Fort, and Felix Tintelnot. Forthcoming. “Export-Platform FDI: Cannibalization or Complementarity?” American Economic Association Papers and Proceedings 114 (May). Abstract

We develop a model of export-platform foreign direct investment (FDI) in which final goods are produced only with labor and there are no fixed costs of exporting. We derive a simple condition that determines whether an MNE's plants are substitutes or complements. This condition is shaped by the relative size of (i) the cross-firm elasticity of demand the MNE faces for its goods and (ii) the within-firm elasticity of labor substitution across the MNE's plants. In two extensions of the model, we show that this complementarity is enhanced by firm-level (rather than plant-level) fixed costs of exporting and of sourcing inputs.

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Antras, Pol, Evgenii Fadeev, Teresa Fort, and Felix Tintelnot. Forthcoming. “Exporting, Global Sourcing, and Multinational Activity: Theory and Evidence from the United States.” forthcoming, Review of Economics and Statistics. Abstract

Multinational firms (MNEs) dominate trade flows, yet their global production decisions are often ignored in firm-level studies of exporting and importing.  Using newly merged data on US firms' trade and multinational activity by country, we show that MNEs are more likely to trade not only with countries in which they have affiliates, but also with other countries within their affiliates' region.  We rationalize these patterns with a new source of firm-level scale economies that arises when country-specific fixed costs to source from, or sell in, a market are shared across all the MNE's plants.  These shared fixed costs create interdependencies between a firm's production and trade locations that generate third-market responses to bilateral trade policy changes.

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Antras, Pol, Teresa Fort, Agustín Gutiérrez, and Felix Tintelnot. Forthcoming. “Trade Policy and Global Sourcing: A Rationale for Tariff Escalation.” forthcoming, Journal of Political Economy Macroeconomics. Abstract

 

Import tariffs tend to be higher on final goods than inputs, a phenomenon commonly referred to as tariff escalation. Despite its salience, existing trade policy results do not predict that tariff escalation increases social welfare. We show that tariff escalation is often welfare-improving when final-good production occurs under increasing returns to scale. In our model, a country can export inputs directly, or by embodying them into exports of final goods. The latter raises welfare when final-good efficiency is increasing in sector size, and a final-good production subsidy or import tariff are equally effective in exploiting this benefit. When import tariffs are the only policy tools, this force generally dominates other motives for an input tariff, leading to a disproportionately large tariff on final goods. We calibrate our model and show that in such second-best settings, tariff escalation maximizes welfare for empirically relevant parameter values whenever the returns to scale for final goods are at least as large those for inputs. A quantitative evaluation of the US-China trade war demonstrates that any welfare gains are overwhelmingly driven by final-good tariffs.

 

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2023
Antras, Pol. 2023. “Interest Rates and World Trade: An 'Austrian' Perspective.” American Economic Association Papers and Proceedings 113 (May): 65-69. Abstract
This paper develops a framework to study the interplay between world trade and interest rates. The model incorporates an explicit notion of time and of production length, along the lines of the 'Austrian' tradition of Bohm-Bawerk (1889). Changes in the interest rate affect production lengths, labor productivity, and the financial costs of exporting. I decompose the response of the volume of world trade to changes in the interest rate into four components: (i) a labor productivity effect, (ii) a propensity to consume out of labor income effect, (iii) a temporal dimension of variable trade costs effect, and (iv) a selection into exporting effect.
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Antràs, Pol, Stephen Redding, and Esteban Rossi-Hansberg. 2023. “Globalization and Pandemics.” American Economic Review 113 (4): 939-81. Abstract

We propose a theory of the relationship between globalization and pandemics. We start by documenting the importance of international trade for the diffusion of infections in several pandemics throughout history. We also show that trade is closely intertwined with travel. Motivated by this evidence, we build a framework in which business travel facilitates trade according to a constant elasticity gravity equation mediated by mobility frictions. In turn, travel leads to human interactions that transmit disease, as in the Susceptible-Infected-Recovered (SIR) model. We highlight three novel interactions between these two mechanisms. First, trade-motivated travel generates an epidemiological externality across countries. Therefore, reductions in international frictions affect the evolution of the epidemic in each country, and the condition for a pandemic to occur. Second, if infections lead to deaths, or reduce individual labor supply, we establish a general equilibrium social distancing effect, whereby increases in relative prices in unhealthy countries reduce travel to those countries. Third, if agents internalize the threat of infection, we show that their behavioral responses lead to a reduction in travel that is larger for higher-trade-cost locations, and hence leads to an initial fall in the ratio of trade to GDP in the early stages of the epidemic, before a subsequent recovery.

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2022
Antras, Pol, and Davin Chor. 2022. “Global Value Chains.” Handbook of International Economics. Vol. 5. Elsevier. Abstract
This paper surveys the recent body of work in economics on the importance of global value chains (GVCs) in shaping international trade flows and multinational activity. On the empirical front, we begin reviewing several variants of the "macro approach" to measuring the relevance of global production sharing in the world economy, and we also offer a critical evaluation of the country- and industry-level datasets (or World Input Output Tables) that have been used to date. We next discuss the advantages and disadvantages of a burgeoning alternative "micro approach" that has instead employed firm-level datasets to document the ways in which firms have sliced up their value chains across countries. On the theoretical front, we propose an analogous dissection of the literature. First, we review a vast body of work developing country- and industry-level quantitative frameworks that are easily calibrated with World Input Output Tables, and that open the door for counterfactual exercises with minimal demands on estimation. Second, we overview micro-level frameworks that have treated firms rather than countries or industries as the relevant unit of analysis, and that have unveiled a number of distinctive mechanisms by which GVCs shape the determinants and consequences of international trade flows in ways distinct from traditional models of international trade. We close this survey with a discussion of a still infant literature on the desirability and effects of trade policy in a world of GVCs.
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2021
Antràs, Pol. 2021. “De-Globalisation? Global Value Chains in the Post-COVID-19 Age.” 2021 ECB Forum: "Central Banks in a Shifting World" Conference Proceedings. Abstract

This paper evaluates the extent to which the world economy has entered a phase of de-globalisation, and it offers some speculative thoughts on the future of global value chains in the post-COVID-19 age. Although the growth of international trade flows relative to that of GDP has slowed down since the Great Recession, this paper finds little systematic evidence indicating that the world economy has already entered an era of de-globalisation. Instead, the observed slowdown in globalization is a natural sequel to the unsustainable increase in globalization experienced in the late 1980s, 1990s and early 2000s. I offer a description of the mechanisms leading to that earlier expansionary phase, together with a discussion of why these forces might have run out of steam, and of the extent to which they may be reversible. I conclude that the main challenge for the future of globalisation is institutional and political in nature rather than technological, although new technologies might aggravate the trends in inequality that have created the current political backlash against globalisation. Zooming in on the COVID-19 global pandemic, I similarly conclude that the current health crisis may further darken the future of globalisation if it aggravates policy tensions across countries.

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Almunia, Miguel, Pol Antràs, David Lopez-Rodriguez, and Eduardo Morales. 2021. “Venting Out: Exports during a Domestic Slump.” American Economic Review 111 (11): 3611-62. Publisher's Version Abstract

We exploit plausibly exogenous geographical variation in the reduction in domestic demand caused by the Great Recession in Spain to document the existence of a robust, within-firm negative causal relationship between demand-driven changes in domestic sales and export flows. Spanish manufacturing firms whose domestic sales were reduced by more during the crisis observed a larger increase in their export flows, even after controlling for firms' supply determinants (such as labor costs). This negative relationship between demand-driven changes in domestic sales and changes in export flows illustrates the capacity of export markets to counteract the negative impact of local demand shocks. We rationalize our findings through a standard heterogeneous-firm model of exporting expanded to allow for non-constant marginal costs of production. Using a structurally estimated version of this model, we conclude that the firm-level responses to the slump in domestic demand in Spain could well have accounted for around one-half of the spectacular increase in Spanish goods exports (the so-called `Spanish export miracle') over the period 2009-13.

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2020
Antràs, Pol. 2020. “Conceptual Aspects of Global Value Chains.” World Bank Economic Review 34 (3): 551-574. Publisher's Version Abstract

This article offers an overview of some key conceptual aspects associated with the rise of global value chains (GVCs). It outlines a series of alternative interpretations and definitions of what the rise of GVCs entails, and it traces the implications of these alternative conceptualizations for the measurement of the phenomenon, as well as for elucidating the key determinants and implications of GVC participation, both at the country level and at the firm level. In the process, it offers some speculative thoughts about the future of GVCs in light of the advent of an array of new technologies.

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Antràs, Pol, and Alonso de Gortari. 2020. “On the Geography of Global Value Chains.” Econometrica 84 (4): 1553–1598. Abstract

This paper develops a multi-stage general-equilibrium model of global value chains (GVCs) and studies the specialization of countries within GVCs in a world with barriers to international trade. With costly trade, the optimal location of production of a given stage in a GVC is not only a function of the marginal cost at which that stage can be produced in a given country, but is also shaped by the proximity of that location to the precedent and the subsequent desired locations of production. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central locations. We also develop and estimate a tractable, quantifiable version of our model that illustrates how changes in trade costs affect the extent to which various countries participate in domestic, regional or global value chains, and traces the real income consequences of these changes.

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2019
Alfaro, Laura, Pol Antràs, Davin Chor, and Paola Conconi. 2019. “Internalizing Global Value Chains: A Firm-Level Analysis.” Journal of Political Economy 127 (2): 509-559. Publisher's Version Abstract

In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. We describe a property-rights model of firm boundary choices along the value chain that generalizes Antràs and Chor (2013). To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with Input-Output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage, as well as by the firm's productivity. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.

 

 

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2018
Antràs, Pol, and Davin Chor. 2018. “On the Measurement of Upstreamness and Downstreamness in Global Value Chains.” World Trade Evolution: Growth, Productivity and Employment, 126-194. Taylor & Francis Group. Abstract

This paper offers four contributions to the empirical literature on global value chains (GVCs). First, we provide a succinct overview of several measures developed to capture the upstreamness or downstreamness of industries and countries in GVCs. Second, we employ data from the World Input-Output Database (WIOD) to document the empirical evolution of these measures over the period 1995-2011; in doing so, we highlight salient patterns related to countries' GVC positioning - as well as some puzzling correlations - that emerge from the data. Third, we develop a theoretical framework - which builds on Caliendo and Parro's (2015) variant of the Eaton and Kortum (2002) model - that provides a structural interpretation of all the entries of the WIOD in a given year. Fourth, we resort to a calibrated version of the model to perform counterfactual exercises that: (i) sharpen our understanding of the independent effect of several factors in explaining the observed empirical patterns in the period 1995-2011; and (ii) provide guidance for how future changes in the world economy are likely to shape the positioning of countries in GVCs.

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2017
Antràs, Pol, Alonso de Gortari, and Oleg Itskhoki. 2017. “Globalization, Inequality and Welfare.” Journal of International Economics 108: 387-412. Publisher's Version Abstract

This paper studies the welfare implications of trade opening in a world in which trade raises aggregate income but also increases income inequality, and in which redistribution needs to occur via a distortionary income tax-transfer system. We provide tools to characterize and quantify the effects of trade opening on the distribution of disposable income (after redistribution). We propose two adjustments to standard measures of the welfare gains from trade: a `welfarist' correction inspired by the Atkinson (1970) index of inequality, and a `costly-redistribution' correction capturing the efficiency costs associated with the behavioral responses of agents to trade-induced shifts across marginal tax rates. We calibrate our model to the United States over the period 1979-2007 using data on the distribution of adjusted gross income in public samples of IRS tax returns, as well as CBO information on the tax liabilities and transfers received by agents at different percentiles of the U.S. income distribution. Our quantitative results suggest that these corrections are nonnegligible: trade-induced increases in inequality of disposable income erode about 20% of the gains from trade, while the gains from trade would be about 15% larger if redistribution was carried out via non-distortionary means.

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Antràs, Pol, Teresa C. Fort, and Felix Tintelnot. 2017. “The Margins of Global Sourcing: Theory and Evidence from U.S. Firms.” American Economic Review 107 (9): 2514-64. Abstract

We develop a quantifiable multi-country sourcing model in which firms self-select into importing based on their productivity and country-specific variables.  In contrast to canonical export models where firm profits are additively separable across destination markets, global sourcing decisions naturally interact through the firm's cost function.  We show that, under an empirically relevant condition, selection into importing exhibits complementarities across source markets.  We exploit these complementarities to solve the firm's problem and estimate the model. Comparing counterfactual predictions to reduced-form evidence highlights the importance of interdependencies in firms' sourcing decisions across markets, which generate heterogeneous domestic sourcing responses to trade shocks.

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2016
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2015
Antràs, Pol, and C. Fritz Foley. 2015. “Poultry in Motion: A Study of International Trade Finance Practices.” Journal of Political Economy 123 (4): 809-852. Abstract

This paper analyzes the financing terms that support international trade and sheds light on how these terms shape the impact of economic shocks on trade. Analysis of transaction-level data from a U.S.-based exporter of frozen and refrigerated food products, primarily poultry, reveals broad patterns about the use of alternative financing terms. These patterns help discipline a model in which the choice of trade finance terms is shaped by the risk that an importer defaults on an exporter and by the possibility that an exporter does not deliver goods as specified in the contract. The empirical results indicate that cash in advance and open account terms are much more commonly used than letter of credit and documentary collection terms.  Transactions are more likely to occur on cash in advance or letter of credit terms when the importer is located in a country with weak contractual enforcement. As an importer develops a relationship with the exporter, transactions are less likely to occur on terms that require prepayment. During the recent crisis, the exporter was more likely to demand cash in advance terms when transacting with new customers, and customers that traded on cash in advance and letter of credit terms prior to the crisis decreased their purchases by 17.3% more than other customers. The model illustrates that these findings can be rationalized if (i) misbehavior on the part of the exporter is of little concern to importers, and (ii) local banks in importing countries are more effective than the exporter in pursuing financial claims against importers.

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2014
Antràs, Pol, and Stephen R Yeaple. 2014. “Multinational Firms and the Structure of International Trade.” Handbook of International Economics, 4: 55-130. Publisher's Version Abstract

This article reviews the state of the international trade literature on multinational firms. This literature addresses three main questions. First, why do some firms operate in more than one country while others do not? Second, what determines in which countries production facilities are located? Finally, why do firms own foreign facilities rather than simply contract with local producers or distributors? We organize our exposition of the trade literature on multinational firms around the workhorse monopolistic competition model with constant-elasticity-of-substitution (CES) preferences. On the theoretical side, we review alternative ways to introduce multinational activity into this unifying framework, illustrating some key mechanisms emphasized in the literature. On the empirical side, we discuss the key studies and provide updated empirical results and further robustness tests using new sources of data.

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I survey the influence of Grossman and Hart's (1986. “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,” 94 Journal of Political Economy 691–719.) seminal paper in the field of International Trade. I discuss the implementation of the theory in open-economy environments and its implications for the international organization of production and the structure of international trade flows. I also review empirical work suggestive of the empirical relevance of the property-rights theory. Along the way, I develop novel theoretical results and also outline some of the key limitations of existing contributions. (JEL D23, F10, F12, F14, F21, F23, L22, L23).

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2013
Antràs, Pol, and Davin Chor. 2013. “Organizing the Global Value Chain.” Econometrica 81 (6): 2127–2204. DOI: 10.3982/ECTA10813 Abstract
We develop a property-rights model of the firm in which production entails a continuum of uniquely sequenced stages. In each stage, a final-good producer contracts with a distinct supplier for the procurement of a customized stage-specific component. Our model yields a sharp characterization for the optimal allocation of ownership rights along the value chain. We show that the incentive to integrate suppliers varies systematically with the relative position (upstream versus downstream) at which the supplier enters the production line. Furthermore, the nature of the relationship between integration and “downstreamness” depends crucially on the elasticity of demand faced by the final-good producer. Our model readily accommodates various sources of asymmetry across final-good producers and across suppliers within a production line, and we show how it can be taken to the data with international trade statistics. Combining data from the U.S. Census Bureau’s Related Party Trade database and estimates of U.S. import demand elasticities from Broda and Weinstein (2006), we find empirical evidence broadly supportive of our key predictions. In the process, we develop two novel measures of the average position of an industry in the value chain, which we construct using U.S. Input-Output Tables.
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2012
Antràs, Pol, and Robert W Staiger. 2012. “Trade Agreements and the Nature of Price Determination.” American Economic Review Papers and Proceedings 102 (3): 470-476. DOI:10.1257/aer.102.3.470 Abstract
According to the terms-of-trade theory, negotiations over tariffs alone, coupled with an effective market access preservation rule, can bring governments to the efficiency frontier. In this paper, we show that the nature of international price determination is important for this central result of the terms-of-trade theory. While the received theory assumes that international prices are fully disciplined by aggregate market clearing conditions, we show here that support for "shallow" integration is overturned, and instead a need for "deep" integration is suggested ? wherein direct negotiations occur over both border and behind-the-border policies ? if international prices are determined through bargaining.
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