The Impact of Demand Shocks on Firm-Level Offshoring Behavior: Theory and Evidence

MPRA Paper from University Library of Munich, Germany

Abstract: This paper extends the model of Antras et al.(2014) to disentangle the link between demand shocks and firm-level offshoring decisions. The model predicts that a positive demand shock increases the firm-level purchases of imported intermediates in both the extensive and intensive margins. Using a difference-in-difference approach, we examine the response of Chinese exporters to a quota removal on textile and clothing products, which is equivalent to a positive demand shock. The findings indicate that firms import more varieties and higher volumes of intermediates after the quota removal. The results are robust to different regression designs.

Keywords: Intermediates Offshoring; Textile and Clothing; Demand Shock; Quota Removal (search for similar items in EconPapers)
JEL-codes: F10 F14 L11 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-bec, nep-int and nep-sog
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https://mpra.ub.uni-muenchen.de/73734/1/MPRA_paper_73734.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/81814/8/MPRA_paper_81814.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:73734

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