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Measuring trade in value added with Firm-Level Data. NBB Working Paper No 378, November 2019

Berns, Rudolf and Kikkawa, Ayuma Ken (2019) Measuring trade in value added with Firm-Level Data. NBB Working Paper No 378, November 2019. [Working Paper]

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    Abstract

    Global Value Chains have proliferated economic policy debates. Yet a key concept – trade in value added –is likely mismeasured because of sectoral aggregation bias stemming from reliance on inputoutput tables. This paper uses comprehensive firm-level data on both domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added and, correspondingly, understated import content of gross exports. The economic magnitude of the estimated bias varies from moderate to large – at 2-5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firm import and export intensities and firm size determine the magnitude of the sectoral aggregation bias.

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    Item Type: Working Paper
    Uncontrolled Keywords: Global Value Chains, Input-Output tables, Aggregation Bias
    Subjects for non-EU documents: Countries > Belgium
    EU policies and themes > Policies & related activities > economic and financial affairs > trade policy
    Countries > China
    EU policies and themes > External relations > international trade
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > National Bank of Belgium (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 28 Jan 2020 19:26
    Number of Pages: 41
    Last Modified: 28 Jan 2020 19:26
    URI: http://aei.pitt.edu/id/eprint/102306

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