We study the relationship between new imported inputs and the introduction of new domestic products. To this purpose, we assemble a novel data set covering 25 European countries over 1995–2007 and containing information on domestic production and bilateral trade for the universe of goods. We develop a procedure to identify new imported inputs and new domestic products, while dealing with the complications raised by the yearly changes in the commodity classifications. We augment these data with information on prices and novel estimates of quality. We organize the empirical analysis around a version of the endogenous growth model with expanding variety, in which inputs are allowed to be heterogeneous in terms of quality. In line with this framework, we find three main results. First, new imported inputs have a strong positive effect on product creation in Europe. Second, they work through a combination of mechanisms, allowing countries to benefit from both wider and better sets of intermediate products. Finally, new imported inputs give a substantial boost to output growth in manufacturing.

Crino', R., Colantone, I., New Imported Inputs, New Domestic Products, <<JOURNAL OF INTERNATIONAL ECONOMICS>>, 2014; (Gennaio): 147-165. [doi:10.1016/j.jinteco.2013.10.006] [http://hdl.handle.net/10807/67070]

New Imported Inputs, New Domestic Products

Crino', Rosario;
2014

Abstract

We study the relationship between new imported inputs and the introduction of new domestic products. To this purpose, we assemble a novel data set covering 25 European countries over 1995–2007 and containing information on domestic production and bilateral trade for the universe of goods. We develop a procedure to identify new imported inputs and new domestic products, while dealing with the complications raised by the yearly changes in the commodity classifications. We augment these data with information on prices and novel estimates of quality. We organize the empirical analysis around a version of the endogenous growth model with expanding variety, in which inputs are allowed to be heterogeneous in terms of quality. In line with this framework, we find three main results. First, new imported inputs have a strong positive effect on product creation in Europe. Second, they work through a combination of mechanisms, allowing countries to benefit from both wider and better sets of intermediate products. Finally, new imported inputs give a substantial boost to output growth in manufacturing.
Inglese
Crino', R., Colantone, I., New Imported Inputs, New Domestic Products, <<JOURNAL OF INTERNATIONAL ECONOMICS>>, 2014; (Gennaio): 147-165. [doi:10.1016/j.jinteco.2013.10.006] [http://hdl.handle.net/10807/67070]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/67070
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