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- W2891811678 abstract "This paper uses a unique dataset of Japanese multinational affiliates, which contains information on sales forecasts, to detect information imperfection and learning in the international market. We document three stylized facts concerning affiliates' forecasts. First, forecast errors (FEs) of sales decline with the affiliate's age. Second, if the parent firm has previous export experience to the region where its affiliate is set up, the entering affiliate starts with a smaller absolute value of FEs. Third, FEs of sales are positively correlated over time and this positive correlation becomes stronger when the affiliates are located further away from Japan. In total, we view these facts as direct evidence for the existence of imperfect information and learning in the international market. We then build up and quantify a dynamic industry equilibrium model of trade and foreign direct investment (FDI), which features information rigidity and learning, in order to explain the documented facts. Counterfactual analysis shows that the variance of time-invariant demand draws and that of transitory shocks have qualitatively different and quantitatively important implications for dynamic patterns of trade/multinational production, dynamic selection, and aggregate productivity." @default.
- W2891811678 created "2018-09-27" @default.
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- W2891811678 date "2018-03-01" @default.
- W2891811678 modified "2023-09-27" @default.
- W2891811678 title "Uncertainty, Imperfect Information, and Learning in the International Market" @default.
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