Essays on firm performance, agglomeration and international trade

Essays on firm performance, agglomeration and international trad

The bilateral trade effects of announcement shocks: Brexit as a natural field experiment

We analyze the effects of uncertainty and anticipation shocks associated with the 2016 Brexit vote as a treatment on trade between the UK and 14 EU and 14 non-EU trading partners, using the Synthetic Control Method (SCM). After controlling for exchange rate and GDP changes, UK exports to both groups of countries fell below those of the ‘synthetic Britain’, with much of the shortfall developing over the year prior to the referendum, following the 2015 Conservative general election win. The results indicate that UK exports to EU countries may have lost nearly 25% by early 2018, due to the Brexit shock, somewhat more than those to non-EU countries. Imports from the EU and non-EU countries also declined a little, although there is tentative evidence that UK consumers may have been avoiding countries with PTAs with the EU, and possibly turning towards the Commonwealth. Overall, the results confirm that policy uncertainty has a major effect upon trade, and that uncertainty about supply chain costs is a potential explanation for at least some of the shortfall

Estimating the trade effects of the Brexit announcement shock

Estimating the trade effects of the Brexit announcement shoc

Uncovering spatial productivity centers using asymmetric bidirectional spillovers

The principal contribution of this paper is to present the first method to sift through a large number of firms in an industry to uncover which firms act as large spatial total factor productivity (TFP) growth centers. We define a large spatial TFP growth center as a firm that is a large net generator of spatial TFP growth spillovers, i.e., it is a source of large TFP growth spill-outs to other firms vis-à-vis the size of the TFP growth spill-ins that permeate to the firm from other firms. We use this definition because, other things being equal, firms would want to locate near a firm that is a net generator of TFP growth spillovers. In the process of presenting the above method we make three further contributions, two of which are methodological and the other relates to our application. First, rather than follow the literature on spatial frontier modeling by considering spatial interaction between firms in a single network, we introduce a more sophisticated model that is able to account for spatial interaction in multiple networks. Second, we obtain bidirectional spatial TFP growth decompositions by complementing a unidirectional decomposition in the literature, where the spillover components are spill-ins to a firm, with a decomposition that includes spill-out components. Third, from a spatial revenue frontier for U.S. banks (1998–2015), we find a number of cases where banks that represent large spatial TFP growth centers have branches that cluster together, while in several states we find no such clusters.<br

Productivity debacle in the UK: Do post-crisis firm cohorts explain the performance puzzle?

This paper investigates how the aftermath of the 2008 crisis affected firm productivity in the UK, focusing particularly on the cohort effect of firms established after 2008 - a previously overlooked aspect of the crisis - as well as the interaction with access to credit, which we test using firm-specific and time-varying credit scores. For identification, a matched sample is used based on credit score, firm age, size and ownership status, combining propensity score matching with difference-in-differences. While we find evidence that smaller firm size and changes in credit conditions affect productivity, about half of the difference in productivity remains unexplained. When we extend the matching analysis to examine across sectors and cohorts, we find that the low productivity performance 2011-16 is driven primarily by newer firms in the services sector, rather than in manufacturing. Within services, the underlying productivity puzzle is driven by a cessation of output growth in high-productivity financial services, while abundant labour supply has led to a `levelling down' of performance of newer firms in the rest of services, in line with relatively low-productivity manufacturing. </p

Aid effectiveness: Human rights as a conditionality measure

The ‘aid conditionality’ hypothesis as documented in the literature suggests that aid is effective in augmenting growth only in the presence of a sound policy environment. This hypothesis was so influential that its policy recommendation, to provide aid conditional upon recipient domestic policies, is currently the dominant ODA allocation criterion. However non-economic dimensions of development (political and institutional) are increasingly seen as fundamental. For this reason, this paper focuses on the linkage between aid and a non-economic factor like Human Rights (reflecting repression and corruption) as a measure of aid effectiveness, in explaining growth outcomes across 42 Least Developed economies. We find that countries with better protection of human rights experience positive growth from aid receipts, signifying the role of stronger institutions in enabling more effective use of aid. The paper thus concludes that the measurement and monitoring of human rights provision is a useful tool in gauging the likely effectiveness of foreign aid.</p

Investment for development: The UK’s strategy towards Development Finance Institutions: Human Rights provision and the effectiveness of UK Aid programmes

Investment for development: The UK’s strategy towards Development Finance Institutions: Our response to Call for Evidence</p

The Great Trade Collapse and the determinants of UK export margins: a cohort‐ and firm‐level matching approach

This paper uses a detailed dataset of UK firms between 2005-16, to investigate how export participation and export values were affected by the 2008 crisis and particularly the post-crisis recovery period. Viewing the post-crisis period as a treatment compared to before the crisis, we compare firm export propensity and export values using a propensity score matching approach. We conclude that the underlying relationships between size, productivity, creditworthiness and exports remained remarkably consistent throughout the period. After correcting for TFP and credit scores, we find relatively constant export propensity across the whole time period, except for younger firms in services industries, whose export propensity increased. Our results suggest that the slowdown in trade in this period has not been attributable to a change in underlying firm export behaviour