Costas Arkolakis

The Extensive Margin of Exporting Products: A Firm-Level Analysis

We examine three-dimensional panel data for Brazilian and Chilean exporters, their products and destinations. The data show that (i) the distribution of the exporters’ number of goods (the exporter scope) is robust within destinations and approximately Pareto, (ii) exporter scope is positively associated with average sales per good within destinations but not across, and (iii) exports are concentrated in few top-selling goods by flrm. We present a heterogeneous-flrm model with product choice that implies these regularities and retains key predictions of previous trade models. At the country level, the model generates bilateral trade ∞ows consistent with gravity-equation evidence. Across flrms, the model explains regularities with convex product-entry costs that increase more than proportionally in scope on the distribution side. Within flrms, variable product-entry costs,

The Challenge of Trade Adjustment in Greece

Greece’s trade deficit declined by 10% of GDP between 2007 and 2012, removing one of the great economic imbalances of the pre-crisis years. However, this reduction was achieved exclusively through import compression while exports fell over that period, thereby worsening the economic crisis. This chapter studies Greece’s export underperformance in comparison to Ireland, Portugal and Spain as well as Greece’s own pre-crisis experience. The main findings are that (1) given past performance, Greece’s exports should have increased by 25%, rather than drop by 5% between 2007 and 2012; (2) labor markets have adjusted to the new economic environment; (3) product markets did not adjust, hindering the recovery of competitiveness; (4) export underperformance is responsible for a third of the decline in GDP since 2007. We find that the business environment and firm size distribution in Greece are also hindering the necessary adjustment.