Firms in international trade

In my research, I intend to study the gains from trade from an empirical point of view. I have gathered an exhaustive micro dataset of Norwegian manufacturing firms, including firm characteristics such as turnover, value added etc., and their internationa l activities, both in terms of commodity trade (imports and exports) and foreign direct investment (FDI), to every destination in the world. I intend to develop structural microeconometric models to study the behavior of firms in relation to trade. I will address key research questions, such as how entry, exit and the scale of non-trading and trading firms evolve and how this churning of firms contributes to aggregate growth, and welfare, in the economy. These questions are clearly important from a p olicy point of view, in assessing how the Norwegian economy responds to shocks and how fast reallocations take place. For example, Bartelsman, Haltiwanger and Scarpetta (2004) show that less-productive European entrants tend to stay in the market, while l ess-productive US entrants exit, freeing resources to new ventures. These questions are largely unexplored in the case of Norway, but yet firm-level dynamics appear to be crucial for the relative success of the Norwegian economy. I intend to spend the spring and summer semester 2008 at the Department of Economics at New York University under the supervision of Professor Jonathan Eaton. Professor Eaton is an accomplished researcher in international trade and has made seminal contributions to the fie ld. His supervision would allow me to develop further my quantitative skills as well as giving me the opportunity to discuss research questions with a person with a particular insight into this research area.