Brent Neiman's Working Papers
Multinationals, Intrafirm Trades, and International Macro Dynamics, May 2008.
Submitted
Abstract:
About forty percent of all U.S. international trade occurs between related parties, or intrafirm, such as trades
between a parent and subsidiary of the same multinational corporation. Using a good-level dataset that distinguishes
arm's length from intrafirm trades, I identify differences in pricing behavior that have implications at the firm,
sector, and country levels. First, I establish two new facts that demonstrate how firm boundaries impact resource
allocations and affect, for example, the speed of adjustment of a country's external balances. The substitutability
of competitors' goods impacts the price stickiness of arm's length firms far more than related parties. In particular,
while arm's length prices are more than 9 months stickier for heterogeneous than for homogeneous goods, the gap is
less than 2 months for intrafirm trades. Further, related party price changes are more staggered while arm's length
price changes are more synchronized. Second, I reinterpret prior findings that long-run exchange rate passthrough is
larger in sectors with many related parties. While good-level related party passthrough is likely higher, differences in
good composition and competitive dynamics in such sectors are at least as salient. Third, I solve
numerically a dynamic model with adjustment costs in which a small number of firms respond strategically to each
other's price setting behavior. It successfully explains many of the facts on duration, synchronization, and sector-level
long-run passthrough, though it counterfactually predicts much higher intrafirm passthrough at the good level.
Measuring the Miracle: Market Imperfections and Asia's
Growth Experience (joint with John Fernald), May 2006.
Submitted
Abstract:
The newly industrialized economies (NIEs) of Asia are the fastest-growing economies in the
world since 1960. A clear understanding of their rapid development remains elusive, with continuing
disputes over the roles of technology growth, capital accumulation, and international trade and
investment. We reconcile seemingly contradictory explanations by accounting for imperfections in
output and capital markets. For instance, in Singapore, growth-accounting studies using quantities
(the primal approach) find rising capital-output ratios and a constant labor share; but studies using real
factor prices (the dual approach) find a constant user cost. We provide evidence that “favored” firms
reaped economic profits and received preferential tax treatment, subsidies, and access to capital—
market imperfections that are difficult to capture when implementing the dual approach. Further,
declining pure profits can reconcile the constant or rising labor shares in revenue in the NIEs with
theories of international trade that predict falling labor shares in cost. We provide empirical support
for the quantitative importance of profits and heterogeneous user costs, describe the two-sector
dynamics, and derive measures of technology growth, corrected for the imperfections that we
quantify. We then discuss implications for broader disputes about Asian development.
The Impact of Post-9/11 Visa Policies on Travel to the
United States (joint with Phillip Swagel), May 2007.
Revise and Resubmit, Journal of International Economics
Abstract:
This paper examines the impact of post-9/11 changes in visa and security policy on business
and leisure travel to the United States. American businesses, tourism industry
representatives, and politicians pointed to changes in visa policies as being responsible for a
sharp decline in short-term visitors following the September 11 attacks. Several foreign
governments likewise complained that visa requirements and other security measures were
making it difficult for their citizens to travel to the United States. Using an empirical model
which distinguishes the impact of visa policy from economic and country-specific factors,
we find that changes in visa policy in the aftermath of 9/11 were not important contributors
to the decrease in travel to the United States. Rather, the reduction in entries was largest
among travelers who were not required to obtain a visa.
Pass-through and the Trade Weighted Exchange Rate, January 2007
© 2007 by the President and Fellows of Harvard College