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on International Activities of Firms |
| By: | Andrea Ariu; Giulia Rivolta (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | This paper quantifies the micro- and macro-level consequences of the sudden appreciation of the Swiss franc in 2015, one of the sharpest and most persistent currency movements in recent decades. Using detailed firm-level data on French imports and exports, we show that the Swiss franc appreciation led to a rise in exports, driven mainly by the entry of new firms and new products, while imports increased only briefly due to a spike in prices among continuing firm–product pairs. These dynamics mirror a textbook J-curve adjustment and reveal the firm-level mechanisms underlying this aggregate response. On the macro side, we trace how the shock propagated through supply chains, capturing both direct and indirect exposures through input–output linkages. This network-based perspective uncovers a small but negative overall impact on French GDP, driven by the stronger hit to importers, more reliant on non-euro currencies and more central within domestic production networks, who acted as key conduits transmitting the negative side of the shock across the economy. |
| Keywords: | Exchange rate shocks, international trade, production network. |
| JEL: | F14 F31 F44 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie1:def146 |
| By: | Moder, Isabella; Spital, Tajda |
| Abstract: | Motivated by current events, this paper assesses the impact of tariff increases on bilateral greenfield foreign direct investment (FDI) over the period 2016-2023. Leveraging a comprehensive dataset of announced greenfield investment projects, official FDI statistics, and bilateral product-level tariff data, we estimate a series of gravity equations to uncover key relationships. Our results show that, at an aggregate level, tariff increases are associated with a rise in greenfield FDI, consistent with the tariff-jumping hypothesis. However, this positive effect reverses for greenfield manufacturing FDI, where high-intensity tariff increases significantly deter investment. A sectoral analysis reveals substantial heterogeneity: consumer-facing industries tend to attract more investment following tariff hikes, while input-intensive sectors experience declines. Overall, our findings suggest that using tariffs to stimulate foreign manufacturing investment is a risky strategy. JEL Classification: F13, F21, F23, F68 |
| Keywords: | gravity model, greenfield FDI, protectionism, tariffs, trade policy |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253144 |
| By: | Sarah Clifford; Jakob Miethe |
| Abstract: | This study shows that internal capital markets confer a significant resilience advantage to multinational enterprises (MNEs) during banking crises. First, we document that MNEs experience half the debt contraction of domestic firms during these events. Second, subsidiaries affected by a crisis increase their reliance on intra-group borrowing, offsetting declines in external debt. Third, this ‘multinational capital advantage’ translates into higher post-crisis growth in employment and investment. While this improves the resilience of the host economy to banking crises, the multinational capital advantage may also contribute to the rising market shares of MNEs and increasing firm concentration observed in recent decades. |
| Keywords: | multinational enterprises, internal capital markets, banking crises |
| JEL: | F21 F23 G15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12244 |
| By: | Bertermann, Alexander (ifo Institute, University of Munich; bertermann@ifo.de. Dauth:); Dauth, Wolfgang (Institute for Employment Research (IAB) and University of Bamberg); Suedekum, Jens (DICE, Heinrich-Heine-Universität Düsseldorf); Woessmann, Ludger (University of Munich, ifo Institute; Hoover Institution, Stanford University; CESifo, IZA, and RFBerlin) |
| Abstract: | How do firms and workers adjust to trade and technology shocks? We analyze two mechanisms that have received little attention: training that upgrades skills and early retirement that shifts adjustment costs to public pension systems. We combine novel data on training participation and early retirement in German local labor markets with established measures of exposure to trade competition and robot adoption. Results indicate that negative trade shocks reduce training - particularly in manufacturing - while robot exposure increases training - particularly in indirectly affected services. Both shocks raise early retirement among manufacturing workers. Structural change thus induces both productivity-enhancing and productivity-reducing responses, challenging simple narratives of labor market adaptation and highlighting the scope for policy to promote adjustment mechanisms conducive to aggregate productivity. |
| Keywords: | training, retirement, trade, technological change, automation, robots, firms, workers, labor market JEL Classification: J24, J26, O33, F16, R11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:781 |
| By: | Alexander Bertermann; Wolfgang Dauth; Jens Suedekum; Ludger Woessmann |
| Abstract: | How do firms and workers adjust to trade and technology shocks? We analyze two mechanisms that have received little attention: training that upgrades skills and early retirement that shifts adjustment costs to public pension systems. We combine novel data on training participation and early retirement in German local labor markets with established measures of exposure to trade competition and robot adoption. Results indicate that negative trade shocks reduce training — particularly in manufacturing — while robot exposure increases training — particularly in indirectly affected services. Both shocks raise early retirement among manufacturing workers. Structural change thus induces both productivity-enhancing and productivity-reducing responses, challenging simple narratives of labor market adaptation and highlighting the scope for policy to promote adjustment mechanisms conducive to aggregate productivity. |
| Keywords: | training, retirement, trade, technological change, automation, robots, firms, workers, labor market |
| JEL: | J24 J26 O33 F16 R11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12240 |
| By: | Bertermann, Alexander (LMU Munich); Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung); Suedekum, Jens (Heinrich Heine University Düsseldorf); Woessmann, Ludger (University of Munich) |
| Abstract: | How do firms and workers adjust to trade and technology shocks? We analyze two mechanisms that have received little attention: training that upgrades skills and early retirement that shifts adjustment costs to public pension systems. We combine novel data on training participation and early retirement in German local labor markets with established measures of exposure to trade competition and robot adoption. Results indicate that negative trade shocks reduce training—particularly in manufacturing—while robot exposure increases training—particularly in indirectly affected services. Both shocks raise early retirement among manufacturing workers. Structural change thus induces both productivity-enhancing and productivity-reducing responses, challenging simple narratives of labor market adaptation and highlighting the scope for policy to promote adjustment mechanisms conducive to aggregate productivity. |
| Keywords: | workers, firms, robots, automation, technological change, trade, retirement, training, labor market |
| JEL: | J24 J26 O33 F16 R11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18247 |