Francois de Soyres, Alexandre Gaillard, 21 September 2019

The recent increase in business cycle synchronisation is significantly associated with trade in intermediate inputs. This is an important consequence of global value chains, but we cannot understand it if we use a model in which real GDP movements are simply decomposed into changes in technology and factor supply. This column argues that accounting for profits and extensive margin adjustments reconciles theory and data and enriches our understanding of what makes countries interdependent, offering the first quantitative solution to the 'trade co-movement puzzle'.

Federico Diez, Jiayue Fan, Carolina Villegas-Sanchez, 02 August 2019

Studies of the evolution of market power since 2000 have focused mostly on publicly traded US firms. This column introduces a new global study that incorporates private firms, and decomposes the aggregate effect into intensive and extensive margins. It shows the increase in markup is broad-based across countries and sectors, but is driven by a small number of firms. The markup increase is mainly explained by increases in the average markup of incumbents, and reallocation effects towards new firms that gain market share from incumbents. 

Jerónimo Carballo, Gianmarco Ottaviano, Christian Volpe, 11 August 2013

The authors use highly disaggregated firm-level export data from Costa Rica, Ecuador, and Uruguay over the period 2005-08 to provide a precise characterization of firms' export margins, across products, destination countries, and crucially customers. They show that a firm's number of buyers and the distribution of sales across them systematically vary with the characteristics of its destination markets.

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