Estimating firm product quality using trade data

• 成果类型: Article
• 署名作者: Piveteau, Paul; Smagghue, Gabriel
• 署名单位: Johns Hopkins University; Universidad Carlos III de Madrid
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2019.02.005
• 发表日期: 2019
• 页码: 217-232
• 关键词: International trade; product quality; demand estimation

摘要

We propose a new instrumental variable strategy to estimate product quality at the firm-level, using trade data. Interacting firm importing shares by country with real exchange rates (RER), we obtain a cost shifter that varies across firms and is arguably orthogonal to product quality. We use this import weighted RER as an instrument for export prices and we identify firm-level quality from residual export variations, after controlling for prices. Our quality estimates correlate to firm characteristics (e.g. wages) and to alternative measures of quality available for some rare sectors. Moreover, we document cases in which our estimates more adequately characterize quality compared to prices, a popular proxy for quality. We show for instance that firms add products to their export portfolio when their quality increases, as expected, while simultaneously their prices decrease. This suggests that our empirical strategy, by delivering quality estimates which, unlike prices, are not polluted with productivity variations, should contribute to future research on the link between firm-level product quality and globalization. (C) 2019 Elsevier B.V. All rights reserved.