Publications of Daniel Yi Xu    :chronological  combined listing:

%% Journal Articles   
@article{fds239254,
   Author = {Eslava, M and Fieler, AC and Xu, DY},
   Title = {(Indirect) input linkages},
   Journal = {American Economic Review},
   Volume = {105},
   Number = {5},
   Pages = {662-666},
   Publisher = {American Economic Association},
   Year = {2015},
   Month = {May},
   ISSN = {0002-8282},
   url = {http://dx.doi.org/10.1257/aer.p20151122},
   Doi = {10.1257/aer.p20151122},
   Key = {fds239254}
}

@article{fds325963,
   Author = {Xu, DY},
   Title = {A Structural Empirical Model of R&D, Firm Heterogeneity, and
             Industry Evolution},
   Year = {2008},
   Key = {fds325963}
}

@article{fds331308,
   Author = {Xu, DY},
   Title = {Comments on “Innovation and product reallocation in the
             great recession”},
   Journal = {Journal of Monetary Economics},
   Volume = {93},
   Pages = {21-23},
   Publisher = {Elsevier BV},
   Year = {2018},
   Month = {January},
   url = {http://dx.doi.org/10.1016/j.jmoneco.2017.10.002},
   Doi = {10.1016/j.jmoneco.2017.10.002},
   Key = {fds331308}
}

@article{fds290828,
   Author = {Edmond, C and Midrigan, V and Xu, DY},
   Title = {Competition, markups, and the gains from international
             trade},
   Journal = {American Economic Review},
   Volume = {105},
   Number = {10},
   Pages = {3183-3221},
   Publisher = {American Economic Association},
   Year = {2015},
   Month = {October},
   ISSN = {0002-8282},
   url = {http://dx.doi.org/10.1257/aer.20120549},
   Abstract = {We study the procompetitive gains from international trade
             in a quantitative model with endogenously variable markups.
             We find that trade can significantly reduce markup
             distortions if two conditions are satisfied: (i ) there is
             extensive misallocation, and (ii ) opening to trade exposes
             hitherto dominant producers to greater competitive pressure.
             We measure the extent to which these two conditions are
             satisfied in Taiwanese producer-level data. Versions of our
             model consistent with the Taiwanese data predict that
             opening up to trade strongly increases competition and
             reduces markup distortions by up to one-half, thus
             significantly reducing productivity losses due to
             misallocation.},
   Doi = {10.1257/aer.20120549},
   Key = {fds290828}
}

@article{fds338620,
   Author = {Xu, DY and Cabral, L and Wang, Z},
   Title = {Competitors, Complementors, and Parents: Explaining Regional
             Agglomeration in the U.S. Auto Industry},
   Pages = {1-29},
   Publisher = {Elsevier BV},
   Year = {2018},
   Month = {October},
   url = {http://dx.doi.org/10.1016/j.red.2018.01.006},
   Abstract = {Taking the early U.S. automobile industry as an example, we
             evaluate four competing hypotheses on regional industry
             agglomeration: intra-industry local externalities,
             inter-industry local externalities, employee spinouts, and
             location fixed effects. Our findings suggest that in the
             automobile case, inter-industry local externalities
             (particularly from the carriage and wagon industry) and
             employee spinouts (particularly due to the high spinout rate
             in Detroit) play important roles. The presence of other
             firms in the same industry has a negligible or negative
             effect. Finally, local inputs account for some agglomeration
             in the short run, but the effects are much more profound in
             the long run.},
   Doi = {10.1016/j.red.2018.01.006},
   Key = {fds338620}
}

@article{fds239260,
   Author = {Lederman, D and Rodríguez-Clare, A and Xu, DY},
   Title = {Entrepreneurship and the extensive margin in export growth:
             A microeconomic accounting of Costa Rica's export growth
             during 1997-2007},
   Journal = {World Bank Economic Review},
   Volume = {25},
   Number = {3},
   Pages = {543-561},
   Publisher = {Oxford University Press (OUP)},
   Year = {2011},
   Month = {January},
   ISSN = {0258-6770},
   url = {http://dx.doi.org/10.1093/wber/lhr031},
   Abstract = {Successful exporting countries are often seen as successful
             economies. This paper studies the role of new exporting
             entrepreneurs-defined as firms that became exporters-in
             determining export growth in a fast growing and export
             oriented middleincome country i.e., Costa Rica during
             1997-2007. It provides a detailed description of the
             contribution of export entrepreneurs in the short and long
             run, and comparing the observed patterns with an emerging
             literature on the role of the "extensive" margin in
             international trade. On a year-by-year basis, the rate of
             firm turnover into and out of exporting is high, but exit
             rates decline rapidly with age (i.e., the number of years
             the firm has been exporting). On average, about 30 percent
             of firms in each year tend to exit export activities, and a
             similar percentage of firms enter. The exiting and entering
             firms tend to be significantly smaller than incumbent firms
             in terms of export value (e.g., entrants export about 30
             percent less on average than incumbent firms). These
             findings are consistent with existing evidence for other
             middle income Latin American countries. However, in the long
             run new product-firm combinations (i.e., product-firm
             combinations not present in 1997) account for almost 60
             percent of the value of exports in 2007. Surviving new
             exporters actively adopted new products (for the firm, but
             not necessarily new for the country) and abandoned weaker
             existing products they start with, and their export growth
             rates were very high during a period (1999-2005) when those
             of incumbent exporting firms were actually negative. © The
             Author 2011. Published by Oxford University Press on behalf
             of the International Bank for Reconstruction and
             Development/The World Bank. All rights reserved.},
   Doi = {10.1093/wber/lhr031},
   Key = {fds239260}
}

@article{fds239256,
   Author = {Dunne, T and Klimek, SD and Roberts, MJ and Xu, DY},
   Title = {Entry, exit, and the determinants of market
             structure},
   Journal = {RAND Journal of Economics},
   Volume = {44},
   Number = {3},
   Pages = {462-487},
   Publisher = {WILEY},
   Year = {2013},
   Month = {September},
   ISSN = {0741-6261},
   url = {http://dx.doi.org/10.1111/1756-2171.12027},
   Abstract = {This article estimates a dynamic, structural model of entry
             and exit for two US service industries: dentists and
             chiropractors. Entry costs faced by potential entrants,
             fixed costs faced by incumbent producers, and the toughness
             of short-run price competition are important determinants of
             long-run firm values, firm turnover, and market structure.
             In the dentist industry entry costs were subsidized in
             geographic markets designated as Health Professional
             Shortage Areas (HPSA) and the estimated mean entry cost is
             11 percent lower in these markets. Using simulations, we
             find that entry cost subsidies are less expensive per
             additional firm than fixed cost subsidies. © 2013,
             RAND.},
   Doi = {10.1111/1756-2171.12027},
   Key = {fds239256}
}

@article{fds239255,
   Author = {Midrigan, V and Xu, DY},
   Title = {Finance and misallocation: Evidence from plant-level
             data},
   Journal = {American Economic Review},
   Volume = {104},
   Number = {2},
   Pages = {422-458},
   Publisher = {American Economic Association},
   Year = {2014},
   Month = {February},
   ISSN = {0002-8282},
   url = {http://dx.doi.org/10.1257/aer.104.2.422},
   Abstract = {We use producer-level data to evaluate the role of financial
             frictions in determining total factor productivity (TFP). We
             study a model of establishment dynamics in which financial
             frictions reduce TFP through two channels. First, finance
             frictions distort entry and technology adoption decisions.
             Second, finance frictions generate dispersion in the returns
             to capital across existing producers and thus productivity
             losses from misallocation. Parameterizations of our model
             consistent with the data imply fairly small losses from
             misallocation, but potentially sizable losses from
             inefficiently low levels of entry and technology adoption.
             Copyright © 2014 by the American Economic
             Association.},
   Doi = {10.1257/aer.104.2.422},
   Key = {fds239255}
}

@article{fds368432,
   Author = {Edmond, C and Midrigan, V and Xu, DY},
   Title = {How Costly Are Markups?},
   Journal = {Journal of Political Economy},
   Volume = {131},
   Number = {7},
   Pages = {1619-1675},
   Publisher = {University of Chicago Press},
   Year = {2023},
   Month = {July},
   url = {http://dx.doi.org/10.1086/722986},
   Abstract = {We study the welfare costs of markups in a dynamic model
             with hetero- geneous firms and endogenous markups. We
             provide aggregation re- sults summarizing the macro
             implications of micro-level markup het- erogeneity. We
             calibrate our model to US Census of Manufactures data and
             find that the costs of markups can be large. We decompose
             the costs into three channels: an aggregate markup that acts
             like a uni- form output tax, misallocation of factors of
             production, and ineffi- cient entry. We find that the
             aggregate-markup and misallocation channels account for most
             of the costs of markups and that the entry channel is much
             less important.},
   Doi = {10.1086/722986},
   Key = {fds368432}
}

@article{fds239257,
   Author = {Guner, N and Ventura, G and Yi, X},
   Title = {How costly are restrictions on size?},
   Journal = {Japan and the World Economy},
   Volume = {18},
   Number = {3},
   Pages = {302-320},
   Publisher = {Elsevier BV},
   Year = {2006},
   Month = {August},
   ISSN = {0922-1425},
   url = {http://dx.doi.org/10.1016/j.japwor.2004.11.002},
   Abstract = {We develop a simple framework to address government policies
             that restrict the size of establishments in a particular
             sector. The economy we study is a two-sector extension of
             the span-of-control model of Lucas [Lucas, R.E., 1978. On
             the size distribution of business firms. Bell Journal 9,
             508-523]. In the model, production requires a managerial
             input, and individuals sort themselves into managers and
             workers. Since managers are heterogeneous in terms of their
             ability, establishments of different sizes coexist in
             equilibrium in each sector. We then study government
             policies that aim to change the size distribution of
             establishments in a given sector, such as Japan's Large
             Scale Retail Location Law. How costly are these policies?
             What is their impact on productivity, the number and size
             distribution of establishments? We find that these effects
             are potentially large. © 2005 Elsevier B.V. All rights
             reserved.},
   Doi = {10.1016/j.japwor.2004.11.002},
   Key = {fds239257}
}

@article{fds239259,
   Author = {Guner, N and Ventura, G and Xu, Y},
   Title = {Macroeconomic implications of size-dependent
             policies},
   Journal = {Review of Economic Dynamics},
   Volume = {11},
   Number = {4},
   Pages = {721-744},
   Publisher = {Elsevier BV},
   Year = {2008},
   Month = {October},
   ISSN = {1094-2025},
   url = {http://dx.doi.org/10.1016/j.red.2008.01.005},
   Abstract = {Government policies that impose restrictions on the size of
             large establishments or firms, or promote small ones, are
             widespread across countries. In this paper, we develop a
             framework to systematically study policies of this class. We
             study a simple growth model with an endogenous size
             distribution of production units. We parameterize this model
             to account for the size distribution of establishments and
             for the large share of employment in large establishments.
             Then, we ask: quantitatively, how costly are policies that
             distort the size of production units? What is the impact of
             these policies on productivity measures, the equilibrium
             number of establishments and their size distribution? We
             find that these effects are potentially large: policies that
             reduce the average size of establishments by 20% lead to
             reductions in output and output per establishment up to 8.1%
             and 25.6% respectively, as well as large increases in the
             number of establishments (23.5%). © 2008 Elsevier Inc. All
             rights reserved.},
   Doi = {10.1016/j.red.2008.01.005},
   Key = {fds239259}
}

@article{fds343255,
   Author = {Suarez Serrato and JC and Chen, Z and Liu, Z and Xu,
             DY},
   Title = {Notching R&D Investment with Corporate Income Tax Cuts in
             China},
   Year = {2018},
   Month = {June},
   Abstract = {We analyze the effects of a large fiscal incentive for R&D
             investment in China that awards a lower average corporate
             income tax rate to qualifying firms. The sharp incentives of
             the program generate notches, or jumps, in firm values, and
             vary over time and across firm characteristics. We exploit a
             novel link between survey and administrative tax data of
             Chinese firms to estimate investment responses, the
             potential for evasion, as well as effects on productivity
             and tax payments. We find large responses of reported R&D
             using a cross-sectional “bunching” estimators that is
             new in the R&D literature. We also find evidence that firms
             relabel administrative expenses as R&D to qualify for the
             program. We estimate an intent-to-treat effect of the policy
             on R&D investment of 18.8%, and find that 45% of this
             response is due to evasion. These effects imply
             user-cost-elasticities of 2 for the reported response, and
             1.14 for the real response. We utilize the panel structure
             of the data to estimate the effect of the program on firm
             productivity, and find an increase of 1.6% for targeted
             firms. These estimates are crucial ingredients for designing
             policies that trade-off corporate tax revenue with future
             productivity growth.},
   Key = {fds343255}
}

@article{fds368433,
   Author = {Demir, B and Fieler, AC and Yi Xu and D and Yang, KK},
   Title = {O-Ring Production Networks},
   Year = {2021},
   Month = {February},
   Key = {fds368433}
}

@article{fds239261,
   Author = {Aw, BY and Roberts, MJ and Xu, DY},
   Title = {R&D investment, exporting, and productivity
             dynamics},
   Journal = {American Economic Review},
   Volume = {101},
   Number = {4},
   Pages = {1312-1344},
   Publisher = {American Economic Association},
   Year = {2011},
   Month = {June},
   ISSN = {0002-8282},
   url = {http://dx.doi.org/10.1257/aer.101.4.1312},
   Abstract = {This paper estimates a dynamic structural model of a
             producer's decision to invest in R&D and export, allowing
             both choices to endogenously affect the future path of
             productivity. Using plant-level data for the Taiwanese
             electronics industry, both activities are found to have a
             positive effect on the plant's future productivity. This in
             turn drives more plants to self-select into both activities,
             contributing to further productivity gains. Simulations of
             an expansion of the export market are shown to increase both
             exporting and R&D investment and generate a gradual
             within-plant productivity improvement. © The Nobel
             Foundation 2010.},
   Doi = {10.1257/aer.101.4.1312},
   Key = {fds239261}
}

@article{fds239258,
   Author = {Aw, BY and Roberts, MJ and Xu, DY},
   Title = {R&D investments, exporting, and the evolution of firm
             productivity},
   Journal = {American Economic Review},
   Volume = {98},
   Number = {2},
   Pages = {451-456},
   Publisher = {American Economic Association},
   Year = {2008},
   Month = {May},
   ISSN = {0002-8282},
   url = {http://dx.doi.org/10.1257/aer.98.2.451},
   Doi = {10.1257/aer.98.2.451},
   Key = {fds239258}
}

@article{fds365488,
   Author = {Chen, Z and Jiang, X and Liu, Z and Suárez Serrato and JC and Xu,
             DY},
   Title = {Tax Policy and Lumpy Investment Behaviour: Evidence from
             China’s VAT Reform},
   Journal = {Review of Economic Studies},
   Volume = {90},
   Number = {2},
   Pages = {634-674},
   Publisher = {Oxford University Press (OUP)},
   Year = {2023},
   Month = {March},
   url = {http://dx.doi.org/10.1093/restud/rdac027},
   Abstract = {We incorporate the lumpy nature of firm-level investment
             into the study of how tax policy affects investment
             behaviour. We show that tax policies can directly impact the
             lumpiness of investment. Extensive-margin responses to tax
             policy are key to understanding the effects of different tax
             reforms and to designing effective stimulus policies. We
             illustrate these results by studying China’s 2009 VAT
             reform, which lowered the tax cost of investment and reduced
             partial irreversibility—the price gap between new and used
             capital. Using comprehensive tax survey data and a
             difference-in-differences design, we estimate a 36% relative
             investment increase that is driven by investment spikes.
             Using a dynamic investment model that fits the reduced-form
             effects of the reform, we show that policies that directly
             reduce the likelihood of firm inaction are more effective at
             stimulating investment.},
   Doi = {10.1093/restud/rdac027},
   Key = {fds365488}
}

@article{fds339234,
   Author = {Roberts, MJ and Xu, DY and Fan, X and Zhang, S},
   Title = {The role of firm factors in demand, cost, and export market
             selection for chinese footwear producers},
   Journal = {Review of Economic Studies},
   Volume = {85},
   Number = {4},
   Pages = {2429-2461},
   Publisher = {Oxford University Press (OUP)},
   Year = {2018},
   Month = {October},
   url = {http://dx.doi.org/10.1093/restud/rdx066},
   Abstract = {In this article, we use micro data on both trade and
             production for a sample of large Chinese manufacturing firms
             in the footwear industry from 2002 to 2006 to estimate an
             empirical model of export demand, pricing, and market
             participation by destination market. We use the model to
             construct indexes of firm-level demand, marginal cost, and
             fixed cost. The empirical results indicate substantial firm
             heterogeneity in all three dimension with demand being the
             most dispersed. The firm-specific demand and marginal cost
             components account for over 30% of market share variation,
             40% of sales variation, and over 50% of price variation
             among exporters. The fixed cost index is the primary factor
             explaining differences in the pattern of destination markets
             across firms. The estimates are used to analyse the supply
             reallocation following the removal of the quota on Chinese
             footwear exports to the EU. This led to a rapid
             restructuring of export supply sources on both the intensive
             and extensive margins in favour of firms with high demand
             and low fixed costs indexes, with marginal cost differences
             not being important.},
   Doi = {10.1093/restud/rdx066},
   Key = {fds339234}
}

@article{fds328794,
   Author = {Xu, DY and Roberts, MJ and Fan, X and Zhang, S},
   Title = {The Role of Firm Factors in Demand, Cost, and Export Market
             Selection for Chinese Footwear Producers},
   Publisher = {National Bureau of Economic Research},
   Year = {2012},
   Month = {January},
   url = {http://dx.doi.org/10.3386/w17725},
   Doi = {10.3386/w17725},
   Key = {fds328794}
}

@article{fds363444,
   Author = {Chen, Z and He, Y and Liu, Z and Xu, DY and Serrato,
             JCS},
   Title = {The structure of business taxation in China},
   Volume = {35},
   Number = {1},
   Pages = {131-177},
   Year = {2021},
   Month = {January},
   url = {http://dx.doi.org/10.1086/713495},
   Abstract = {This paper documents facts about the structure of business
             taxation in China using administrative tax data from 2007 to
             2011 from the State Taxation Administration.We first
             document the importance of different business taxes across
             industries. Although corporate income taxes play an
             important role for manufacturing firms, these firms also
             remit a large share of their tax payments through the
             value-added tax system, through the excise tax system, and
             through payroll taxes. Gross receipts taxes play an
             important role for firms in other industries, leading to
             spillovers that may affect the overall economy. Second, we
             evaluate whether the structure of China’s tax revenue
             matches its stage of development. A crosscountry comparison
             of sources of government revenue shows that China collects a
             high share of tax revenue fromtaxes on goods and services
             and a high share of income tax on corporations. Finally, we
             study whether firmlevel differences in effective tax rates
             can be an important source of allocative
             inefficiencies.Decomposing the variation in effective tax
             rates across firms, we find that government policies,
             including loss carry-forward provisions and preferential
             policies for regional, foreign, small, and high-tech firms,
             have significant explanatory power. Nonetheless, although
             effective tax rates vary along a number of dimensions, tax
             policy does not explain the large dispersion in the returns
             to factors of production across firms.},
   Doi = {10.1086/713495},
   Key = {fds363444}
}

@article{fds331945,
   Author = {Fieler, AC and Eslava, M and Xu, DY},
   Title = {Trade, quality upgrading, and input linkages: Theory and
             evidence from Colombia},
   Journal = {American Economic Review},
   Volume = {108},
   Number = {1},
   Pages = {109-146},
   Publisher = {American Economic Association},
   Year = {2018},
   Month = {January},
   url = {http://dx.doi.org/10.1257/aer.20150796},
   Abstract = {A quantitative model brings together theories linking
             international trade to quality, technology, and demand for
             skills. Standard effects of trade on importers and exporters
             are magnifed through domestic input linkages. We estimate
             the model with data from Colombian manufacturing frms before
             the 1991 trade liberalization. A counterfactual trade
             liberalization is broadly consistent with postliberalization
             data. It increases skill intensity from 12 to 16 percent,
             while decreasing sales. Imported inputs, estimated to be of
             higher quality, and domestic input linkages are
             quantitatively important. Economies of scale, export
             expansion, and reallocation of production are small and
             cannot explain post-liberalization data.},
   Doi = {10.1257/aer.20150796},
   Key = {fds331945}
}

@article{fds368434,
   Author = {Tybout, J and Jinkins, D and Xu, DY and Eaton, J},
   Title = {Two-sided Search in International Markets},
   Year = {2016},
   Abstract = {We develop a dynamic model of the many-to-many matching
             processes through which international business relationships
             are formed. Our formulation characterizes exporters' and
             importers' search efforts as functions of their type, their
             current portfolio of business partners, and the market
             conditions they face. After calibrating our model to customs
             records on Colombian retailers, we use it to study the
             steady state and transitory effects of China's emergence as
             a major supplier of consumer goods. In doing so we focus on
             the induced changes in matching patterns, the associated
             reallocation of rents across businesses, and the net effects
             on consumer welfare.},
   Key = {fds368434}
}

@article{fds346772,
   Author = {Hu, MM and Yang, S and Xu, DY},
   Title = {Understanding the social learning effect in contagious
             switching behavior},
   Journal = {Management Science},
   Volume = {65},
   Number = {10},
   Pages = {4771-4794},
   Publisher = {Institute for Operations Research and the Management
             Sciences (INFORMS)},
   Year = {2019},
   Month = {October},
   url = {http://dx.doi.org/10.1287/mnsc.2018.3173},
   Abstract = {We study the contagious switching behavior related to a
             consumer’s choice of wireless carriers, that is, that a
             consumer is more likely to switch wireless carriers if more
             of their contacts from the same carrier have switched.
             Contagious switching (or a positive network effect) can be
             driven by information-based social learning, as well as
             other mechanisms related to network size. Although previous
             marketing literature has documented the social-learning
             effect, most of the applications studied involve products in
             which consumers usually do not enjoy any direct benefits
             from a large network other than from information-based
             social learning. We explore the importance of the
             social-learning effect relative to other mechanisms that may
             also lead to the network effect. We propose a dynamic
             structural model with interpersonal interactions. To model
             the social-learning effect, a consumer uses feedback from
             his or her contacts who have switched from a focal carrier
             to update his or her quality expectations of alternative
             carriers. Our model further accounts for two unique aspects
             of consumer strategic learning: (i) the individual’s
             perception on the signal of alternative carriers from
             contacts who switch is systematically different according to
             whether the signal comes from a loyal contact; and (ii) that
             the perceived noisiness of the signal on alternative
             carriers from a contact who has switched depends on the
             strength of the relationship between the individual and the
             contact. The remaining network effect not captured through
             social learning is modeled as a function of the size of the
             network. We solve the model with a two-step dynamic
             programming algorithm, with the assumption that a consumer
             is forward-looking and decides whether to stay with the same
             service carrier in each period by maximizing the total
             utility received from that day onward. We apply the proposed
             model to the data set of a mobile network operator in a
             European country. We find that churning/switching behavior
             is contagious in the network context and that one-third of
             general network effects can be attributed to social
             learning. We also detect strategic learning by consumers
             from their contacts in two ways: the experience signal on
             alternative carriers from a more loyal contact who has
             switched from the focal carrier is perceived to be more
             positive than that from a less loyal contact; and the
             social-learning effect is stronger from an individual’s
             closest contacts. The simulation analysis demonstrates the
             value of our model in helping a company prioritize its
             customer relationship management effort.},
   Doi = {10.1287/mnsc.2018.3173},
   Key = {fds346772}
}