Results Available Upon Request for
“The Dynamics of Trade and Competition”
Natalie Chen, Jean Imbs, Andrew Scott
Contents
1 Nominal Exchange Rates
1.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
4
2 Factor Endowments
2.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
7
8
3 Arellano-Bond
3.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
9
10
4 Benchmark: Italy
12
4.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5 EU Imports
17
5.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6 Non-EU Imports
22
6.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7 Non-Linearities
27
7.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8 Instrumenting Number of Firms
32
8.1 Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1
Nominal Exchange Rates
1.1
Short Run
Table 1: Prices (Short Run), all country pairs, sector-specific nominal exchange rates
Method
∆ ln
pit−1
p∗
it−1
∆ ln θit
(1)
(2)
(3)
(4)
(5)
(6)
(7)
OLS
OLS
OLS
OLS
IV
IV
IV
—
—
−0.013
(−2.002)
(−1.202)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
∗
∆ ln Dit
0.009
−0.022
0.019
(1.963)
(1.978)
0.066
—
—
−0.035
—
—
—
—
0.025
—
—
—
—
(−4.231)
−0.029
(−4.473)
−0.177
(−4.553)
−0.176
(−4.060)
−0.014
(−2.569)
−0.043
(−2.635)
−0.044
(−2.842)
0.066
(−3.400)
(0.989)
(1.995)
(2.701)
—
—
—
0.007
(0.637)
0.000
(−0.107)
∆ ln Pt
—
∆ ln Pt∗
—
N
800
−0.008
(−0.720)
0.002
(1.413)
0.449
0.089
(1.842)
−0.016
(−1.474)
0.002
(1.584)
0.518
(−1.329)
0.003
0.013
(1.839)
(4.437)
0.521
—
(5.542)
(6.518)
(6.576)
−0.424
−0.584
(−6.865)
−0.577
—
(−5.029)
(−6.825)
800
720
720
800
0.012
(3.803)
0.357
−0.207
−0.051
0.013
(3.625)
0.391
(3.349)
(3.289)
(−3.256)
−0.354
(−3.101)
800
720
−0.404
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (5)
to (7) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Industryspecific bilateral nominal exchange rates (not reported) are included in all regressions.
1
Table 2: Productivity (Short Run), all country pairs, sector-specific nominal exchange rates
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
∗
∆ ln Dit
N
(1)
OLS
—
0.000
(−0.007)
0.024
(2)
OLS
(3)
OLS
(4)
IV
−0.156
−0.101
—
(−5.330)
(−2.805)
0.008
—
—
—
0.024
—
—
—
(0.264)
(0.911)
(0.854)
—
—
0.049
0.074
(2.900)
0.067
0.168
(1.565)
(2.145)
(−0.298)
−0.001
(−0.060)
800
720
0.000
(5)
IV
−0.140
(−2.409)
0.676
(4.852)
0.287
0.871
(4.153)
0.340
(4.598)
(4.889)
(4.647)
(−7.419)
−0.040
(−6.903)
−0.073
(−5.905)
720
800
720
−0.084
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. We
cannot reject the hypothesis that the coefficients on domestic and foreign openness are equal but we can
reject it for the coefficients on the number of domestic and foreign firms. In (4) and (5) instruments
for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the
elasticity of substitution, weight to value and 1992 and 1999 dummies. Industry-specific bilateral nominal
exchange rates (not reported) are included in all regressions.
2
Table 3: Markups (Short Run), all country pairs, sector-specific nominal exchange rates
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
—
−0.017
(−1.346)
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
0.014
N
(3)
OLS
(4)
IV
−0.224
−0.226
—
(−5.900)
(−6.009)
−0.024
—
—
—
0.030
—
—
—
(−2.918)
−0.025
(−2.898)
−0.109
(−3.100)
−0.050
(−3.811)
−0.061
(−4.358)
(2.575)
—
—
−0.038
0.004
(5)
IV
−0.223
(−5.021)
(−1.829)
(1.223)
(−2.834)
∗
∆ ln Dit
(2)
OLS
−0.050
(−3.796)
0.005
(−4.072)
0.005
0.010
−0.161
−0.078
0.013
(1.760)
(2.581)
(2.908)
(3.472)
(3.615)
800
720
720
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. We
cannot reject the hypothesis that the coefficients on domestic and foreign openness are equal but we can
reject it for the coefficients on the number of domestic and foreign firms. In (4) and (5) instruments
for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the
elasticity of substitution, weight to value and 1992 and 1999 dummies. Industry-specific bilateral nominal
exchange rates (not reported) are included in all regressions.
3
1.2
Long Run
Table 4: Prices (Long Run), all country pairs, sector-specific nominal exchange rates
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
−0.012
(−0.230)
−0.007
—
—
—
0.003
—
—
—
(−0.923)
−0.006
(−1.474)
−0.039
(−1.209)
−0.001
(−1.435)
−0.016
(−1.179)
(−0.814)
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
ln
pit−1
p∗
it−1
ln θit−1
ln θ∗it−1
ln
θ it−1
θ∗
it−1
ln Lt−1
(0.406)
—
0.005
(0.557)
(−0.105)
−0.001
(0.706)
(−0.837)
0.721
0.001
0.641
0.004
(2.019)
0.722
−0.044
−0.015
0.005
(1.938)
0.604
(5.386)
(6.592)
(5.682)
(3.470)
−0.624
(−6.843)
−0.853
(−5.034)
−0.768
(−3.843)
(−17.465)
−0.484
(−18.419)
−0.451
(−9.036)
−0.379
(−7.381)
0.011
—
—
—
−0.003
—
—
—
(−4.072)
(1.628)
−0.737
−0.341
(−0.410)
—
0.012
0.063
0.082
(2.423)
(2.401)
(2.794)
−0.101
—
—
—
0.054
—
—
—
−0.069
(−6.161)
−0.074
(−4.897)
(−2.952)
ln L∗t−1
L
ln Lt−1
∗
t−1
ln Pt−1
∗
ln Pt−1
N
(1.664)
—
(−6.687)
0.310
0.301
(6.486)
(9.951)
(−5.469)
−0.283
(−10.100)
800
800
−0.352
0.265
−0.075
0.214
(7.276)
(3.091)
(−7.546)
−0.319
(−3.841)
800
720
−0.295
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
and (4) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes
(real) GDP. Industry-specific bilateral exchange rates (not reported) are included in all regressions.
Industry-specific bilateral nominal exchange rates (not reported) are included in all regressions.
4
Table 5: Productivity (Long Run), all country pairs, sector-specific nominal exchange rates
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
∗
∆ ln Dit
z
ln zit−1
∗
it−1
ln θit−1
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
(5)
IV
(6)
IV
(−2.000)
−0.153
(−1.609)
−0.099
(−2.038)
−0.139
0.016
—
—
—
—
—
0.022
—
—
—
—
—
(0.559)
(0.825)
—
0.042
(1.384)
0.001
(0.132)
−0.354
0.062
(2.625)
0.117
0.491
(4.493)
0.255
0.512
(3.555)
0.254
0.564
(4.113)
0.243
0.594
(4.108)
0.232
(3.533)
(4.647)
(4.034)
(4.374)
(1.741)
(−6.877)
−0.035
(−6.365)
−0.055
(−5.654)
−0.058
(−5.294)
−0.063
(−5.407)
−0.089
(−11.790)
(−9.713)
−0.307
(−6.165)
−0.307
(−4.345)
−0.290
(−4.028)
−0.295
(−3.077)
−0.216
−0.002
—
—
—
—
—
0.046
—
—
—
—
—
(−2.085)
−0.045
(−2.502)
−0.343
(−2.494)
−0.479
(−1.484)
−0.206
(−1.288)
0.187
—
—
—
—
—
−0.248
—
—
—
—
—
(−0.090)
ln θ∗it−1
ln
θ it−1
θ∗
it−1
ln Lt−1
ln L∗t−1
ln
Lt−1
L∗
t−1
ln wit−1
(1.783)
—
(2.589)
−0.184
(−3.052)
—
0.244
0.484
0.565
0.344
0.214
(5.807)
(5.079)
(4.298)
(2.173)
(1.577)
−0.040
—
—
—
—
—
0.096
—
—
—
—
—
(−3.654)
−0.085
(−3.961)
−0.368
(−3.467)
−0.430
(−1.174)
−0.189
(−0.173)
800
800
720
720
720
(−1.361)
∗
ln wit−1
w
(3.742)
ln wit−1
∗
—
N
800
it−1
−0.023
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. We
cannot reject the hypothesis that the coefficients on domestic and foreign variables are equal except for
the coefficients on the number of domestic and foreign firms in (1) to (5). In (3) to (6) instruments
for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the
elasticity of substitution, weight to value and 1992 and 1999 dummies. In (5) wages are instrumented by
the average income tax rate for married individuals and in (6) the number of firms is further instrumented
by its own lags. Lt denotes (real) GDP. Industry-specific bilateral nominal exchange rates (not reported)
are included in all regressions.
5
Table 6: Markups (Long Run), all country pairs, sector-specific nominal exchange rates
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.025
—
—
—
0.013
—
—
—
(−1.515)
−0.011
(−0.732)
−0.019
(−0.776)
−0.036
(−3.021)
−0.037
(−3.054)
0.045
(1.052)
(−2.190)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
(1.235)
—
−0.037
(−3.226)
∗
∆ ln Dit
ln
μit−1
μ∗
it−1
ln θit−1
0.005
(2.525)
−0.627
(−3.424)
0.004
(2.650)
−0.566
0.006
(2.618)
−0.554
−0.023
−0.040
0.006
(2.483)
−0.622
(−17.297)
(−16.345)
(−15.378)
(−12.806)
−0.019
—
—
—
0.000
—
—
—
(−2.200)
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
(−0.021)
—
0.004
0.030
0.031
(0.740)
(1.842)
(1.599)
−0.046
—
—
—
0.075
—
—
—
(−2.109)
−0.016
(−2.678)
−0.028
(−2.225)
800
800
720
(−1.807)
ln L∗t−1
ln
N
Lt−1
L∗
t−1
(2.534)
—
800
−0.028
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. We
cannot reject the hypothesis that the coefficients on domestic and foreign variables are equal except for
the coefficients on the number of domestic and foreign firms. In (3) and (4) instruments for openness
include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the elasticity of
substitution, weight to value and 1992 and 1999 dummies. Lt denotes (real) GDP. Industry-specific
bilateral nominal exchange rates (not reported) are included in all regressions.
6
2
Factor Endowments
2.1
Short Run
Table 7: Productivity (Short Run), all country pairs, controlling for factor endowments
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
∗
∆ ln Dit
∆ ln αit
(1)
OLS
—
0.039
(3)
OLS
(4)
IV
−0.083
−0.083
—
(−2.211)
(−2.228)
0.055
—
—
—
−0.071
—
—
—
(1.080)
(1.424)
(−1.844)
−0.060
(−2.045)
—
—
0.145
0.170
0.177
−0.115
(−1.922)
0.665
(4.508)
0.299
0.874
(3.840)
0.351
(4.274)
(4.705)
(4.936)
(4.575)
(−5.871)
−0.033
(−5.892)
−0.034
(−6.054)
−0.033
(−6.091)
−0.065
(−5.184)
−0.641
−0.657
—
—
—
(−1.587)
1.088
—
—
—
(−2.376)
−0.819
(−0.834)
−0.383
(−0.397)
720
800
720
0.912
(1.925)
(2.121)
it
∆ ln α
α∗
—
—
N
800
it
0.064
(2.460)
(5)
IV
(3.802)
(−1.626)
∆ ln α∗it
(2)
OLS
720
−0.075
−0.227
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. αit denotes
an interaction term between aggregate capital stock and sectoral capital shares.
7
2.2
Long Run
Table 8: Productivity (Long Run), all country pairs, controlling for factor endowments
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
∆ ln αit
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
(5)
IV
(6)
IV
(−0.302)
−0.017
(−0.946)
−0.059
(−1.028)
−0.066
0.044
—
—
—
—
—
−0.049
—
—
—
—
—
(1.265)
(−1.509)
—
0.107
0.049
(2.054)
0.108
0.385
(4.161)
0.219
0.417
(3.607)
0.215
0.585
(3.964)
0.214
0.551
(3.843)
0.143
(2.923)
(3.196)
(4.553)
(4.287)
(3.672)
(1.078)
(−5.263)
−0.028
(−5.640)
−0.028
(−6.158)
−0.043
(−5.815)
−0.044
(−5.423)
−0.062
(−4.898)
−0.764
—
—
—
—
—
0.888
—
—
—
—
—
(−2.467)
−0.841
(−0.666)
−0.340
(−0.506)
−0.269
(−1.323)
−0.815
(−1.091)
−0.322
−0.079
(−1.846)
∆ ln α∗it
it
∆ ln α
α∗
it
ln
zit−1
∗
zit−1
ln θit−1
(1.708)
—
−0.324
−0.666
(−10.061)
(−10.127)
(−6.798)
−0.320
(−6.404)
−0.347
(−3.949)
−0.268
(−4.122)
−0.268
−0.022
—
—
—
—
—
0.035
—
—
—
—
—
(−1.198)
−0.027
(−1.251)
−0.152
(−0.927)
−0.133
(−0.009)
−0.001
(0.751)
0.247
—
—
—
—
—
−0.237
—
—
—
—
—
(−0.744)
ln θ∗it−1
ln
θ it−1
θ∗
it−1
ln Lt−1
ln L∗t−1
ln
Lt−1
L∗
t−1
ln wit−1
(1.208)
—
(4.700)
0.098
(−4.374)
—
0.242
0.331
0.332
0.108
0.145
(5.593)
(4.778)
(3.906)
(0.845)
(1.292)
−0.035
—
—
—
—
—
0.071
—
—
—
—
—
(−2.347)
−0.058
(−2.552)
−0.226
(−2.119)
−0.201
(0.673)
(−0.264)
0.179
—
—
—
—
—
−0.271
—
—
—
—
—
(−1.083)
∗
ln wit−1
ln
wit−1
∗
wit−1
ln αit−1
ln α∗it−1
α
(2.303)
—
(1.285)
−0.039
(−2.151)
ln αit−1
∗
—
N
800
it−1
0.103
(2.383)
0.251
(−0.601)
−0.132
(−0.477)
−0.092
(0.928)
0.227
(1.072)
0.262
800
800
720
720
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
to (6) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (5) wages
are instrumented by the average income tax rate for married individuals and in (6) the number of firms
is further instrumented by its own lags. Lt denotes (real) GDP. αit denotes an interaction term between
aggregate capital stock and sectoral capital shares.
8
3
3.1
Arellano-Bond
Short Run
Table 9: Prices (Short Run), Arellano-Bond estimations, all country pairs
(1)
∆ ln
pit−1
p∗
it−1
(2)
0.384
∆ ln θθit
∗
it
∆ ln Dit
0.372
(13.560)
(13.012)
(−8.045)
−0.076
(−7.763)
−0.039
(−3.315)
−0.077
−0.033
(−4.015)
∗
∆ ln Dit
0.007
0.009
(4.427)
∆ ln Pt
(5.645)
0.471
0.467
(8.633)
∆ ln Pt∗
(8.557)
−0.622
N
−0.551
(−11.820)
(−9.931)
720
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness include cif/fob, EU directives interacted with NTBs, weighted
distance interacted with the elasticity of substitution, weight to value and 1992 and 1999
dummies. The number of lagged dependent variables (one) is chosen in order to reject
autocorrelation of order 2. In (2), industry-specific bilateral nominal exchange rates (not
reported) are included.
Table 10: Productivity and Markups (Short Run), Arellano-Bond estimations, all country pairs
Productivity
∆ ln
zit−1
∗
zit−1
∆ ln
θ it
θ∗
it
∆ ln Dit
∗
∆ ln Dit
(1)
0.394
(9.190)
0.087
(2.460)
0.211
(5.778)
−0.032
(−6.132)
it
∆ ln α
α∗
—
N
720
it
(2)
Markups
0.397
(9.265)
0.090
(2.534)
(3)
∆ ln
μit−1
μ∗
it−1
(4.770)
∆ ln
θ it
θ∗
it
(−5.051)
0.196
−0.060
0.212
∆ ln Dit
−0.032
∗
∆ ln Dit
0.402
—
—
720
N
720
(5.771)
(−6.151)
(1.168)
−0.070
(−6.482)
0.008
(4.553)
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted
with the elasticity of substitution, weight to value and 1992 and 1999 dummies. The number of lagged
dependent variables (one) is chosen in order to reject autocorrelation of order 2. In (2), αit denotes an
interaction term between aggregate capital stock and sectoral capital shares.
9
3.2
Long Run
Table 11: Prices (Long Run), Arellano-Bond estimations, all country pairs
Prices
(1)
(2)
∆ ln
pit−1
p∗
it−1
(11.534)
(11.012)
∆ ln
θ it
θ∗
it
(−3.212)
−0.027
(−2.076)
−0.006
(0.631)
∆ ln Dit
0.299
(−0.656)
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
it
∆ ln α
α∗
p
it
ln pit−1
∗
it−1
θ
ln θit−1
∗
it−1
ln
Lt−1
L∗
t−1
ln Pt−1
∗
ln Pt−1
N
0.003
(2.464)
0.458
0.287
−0.018
0.006
0.004
(2.919)
0.515
(4.987)
(5.522)
(−5.439)
−0.619
(−4.648)
—
—
−0.289
(−16.833)
0.010
−0.541
−0.312
(−16.634)
0.010
(2.884)
(2.648)
−0.049
(−5.806)
(−5.692)
0.159
−0.054
0.173
(4.858)
(5.168)
(−4.975)
−0.188
(−4.824)
720
720
−0.186
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted
with the elasticity of substitution, weight to value and 1992 and 1999 dummies. The number of lagged
dependent variables (one) is chosen in order to reject autocorrelation of order 2. Lt denotes (real) GDP.
In (2), industry-specific bilateral nominal exchange rates (not reported) are included.
10
Table 12: Productivity and Markups (Long Run), Arellano-Bond estimations, all country pairs
Productivity
∆ ln
zit−1
∗
zit−1
∆ ln
θ it
θ∗
it
∆ ln Dit
∗
∆ ln Dit
it
∆ ln α
α∗
it
ln
zit−1
∗
zit−1
ln
θ it−1
θ∗
it−1
L
ln Lt−1
∗
t−1
ln
wit−1
∗
wit−1
α
(1)
0.278
(8.734)
−0.013
(−0.428)
0.096
(2.893)
−0.025
(−5.246)
—
Markups
(3)
∆ ln
μit−1
μ∗
it−1
(7.279)
−0.009
∆ ln
θ it
θ∗
it
(−6.838)
0.082
∆ ln Dit
−0.024
∗
∆ ln Dit
−0.751
—
0.270
(8.426)
(−0.314)
(2.435)
(−4.979)
0.262
−0.067
−0.079
(−8.130)
0.006
(4.028)
—
(−2.189)
−0.256
(−11.751)
−0.044
(−2.699)
0.142
ln
(−11.546)
μit−1
μ∗
it−1
(−15.733)
−0.033
ln
θ it−1
θ∗
it−1
(−2.738)
0.137
ln Lt−1
∗
(−0.821)
−0.027
—
—
0.107
—
—
720
N
720
−0.263
(−1.956)
(4.770)
(3.915)
−0.041
(−1.519)
(−2.366)
ln αit−1
∗
—
N
720
it−1
(2)
(1.267)
L
t−1
−0.460
−0.011
−0.004
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted
with the elasticity of substitution, weight to value and 1992 and 1999 dummies. The number of lagged
dependent variables (one) is chosen in order to reject autocorrelation of order 2. Lt denotes (real) GDP.
In (2), αit denotes an interaction term between aggregate capital stock and sectoral capital shares.
11
4
Benchmark: Italy
4.1
Short Run
Table 13: Prices (Short Run), Benchmark is Italy
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
—
—
−0.033
(−1.721)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
0.050
0.044
(4)
OLS
(5)
IV
(6)
IV
−0.058
−0.056
—
—
(−0.873)
(−0.844)
−0.037
—
—
0.029
—
(−2.311)
−0.033
−0.027
(−3.034)
(2.374)
(1.469)
—
—
—
−0.042
0.013
(3.680)
∆ ln Pt
—
∆ ln Pt∗
—
N
260
−0.025
(−1.480)
0.010
(2.993)
0.567
(7)
IV
0.184
(8)
GMM
0.324
(1.628)
(5.374)
—
—
—
—
—
—
—
(−4.883)
−0.211
(−4.593)
−0.187
(−3.991)
−0.231
(−2.582)
−0.065
(−2.331)
−0.048
(−2.167)
−0.051
(−2.230)
(−1.963)
(2.630)
(−2.403)
∗
∆ ln Dit
−0.030
(−1.631)
(3)
OLS
−0.028
(−1.653)
0.007
(2.050)
0.685
(−1.637)
0.008
0.020
(2.389)
(4.420)
0.691
—
(4.189)
(4.541)
(4.628)
−0.635
−0.886
(−5.935)
−0.880
—
(−5.018)
(−5.957)
260
234
234
260
0.017
(3.917)
0.516
0.019
(3.501)
0.466
−0.048
−0.033
0.010
(3.022)
0.486
(3.099)
(2.150)
(4.445)
(−3.423)
−0.540
(−2.109)
−0.489
(−6.273)
260
234
234
−0.723
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (5)
to (8) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (8), the
number of lagged dependent variables (one) is chosen in order to reject autocorrelation of order 2.
12
Table 14: Productivity (Short Run), Benchmark is Italy
(1)
OLS
Method
z
∆ ln zit−1
∗
—
it−1
∆ ln θit
0.036
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
N
(3)
OLS
(4)
IV
−0.046
−0.059
—
(−0.726)
(−0.939)
0.061
—
−0.243
—
(0.499)
(0.790)
(−3.579)
−0.254
(−3.193)
—
—
0.144
∗
∆ ln Dit
(2)
OLS
0.153
(6)
GMM
(−0.089)
−0.010
(5.917)
—
—
—
—
—
—
1.217
(2.655)
0.175
(5)
IV
(5.760)
0.219
0.315
1.285
(5.445)
0.320
0.348
0.294
(4.123)
0.137
(2.193)
(2.455)
(3.248)
(2.981)
(2.750)
(2.126)
(−6.596)
−0.088
(−6.272)
−0.088
(−6.009)
−0.078
(−5.654)
−0.127
(−5.402)
−0.132
(−6.703)
260
234
234
260
234
234
−0.088
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
to (6) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (6), the
number of lagged dependent variables (one) is chosen in order to reject autocorrelation of order 2.
Table 15: Markups (Short Run), Benchmark is Italy
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
—
−0.006
(−0.390)
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
0.034
N
(3)
OLS
(4)
IV
−0.236
−0.243
—
(−3.568)
(−3.695)
−0.010
—
0.032
(1.958)
—
—
−0.016
0.008
(5)
IV
(6)
GMM
(−3.620)
−0.241
(3.733)
—
—
—
—
—
—
—
(−1.732)
−0.021
(−2.128)
−0.062
(−1.652)
−0.049
(−2.200)
−0.030
(−1.862)
−0.027
(−2.236)
−0.032
(−2.543)
0.276
(−0.625)
(2.129)
(−1.107)
∗
∆ ln Dit
(2)
OLS
−0.025
(−1.663)
0.008
(−2.110)
0.007
0.009
0.008
−0.035
−0.034
0.005
(2.775)
(2.618)
(2.422)
(2.832)
(2.605)
(1.609)
260
234
234
260
234
234
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
to (6) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (6), the
number of lagged dependent variables (one) is chosen in order to reject autocorrelation of order 2.
13
4.2
Long Run
Table 16: Prices (Long Run), Benchmark is Italy
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
−0.029
—
0.019
(4)
IV
0.048
(5)
GMM
0.296
(0.342)
(4.912)
—
—
—
—
—
—
—
(−1.959)
−0.024
(−1.584)
−0.088
(−1.486)
−0.112
(−2.016)
−0.022
(−1.664)
−0.038
(−1.484)
−0.035
(−1.350)
(−1.750)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
(1.087)
—
−0.024
(−1.718)
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
p
ln pit−1
∗
it−1
ln θit−1
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
0.004
(1.118)
0.645
(−1.648)
0.005
(1.548)
0.664
0.013
(2.337)
0.777
0.012
(2.036)
0.638
−0.034
−0.018
0.007
(2.211)
0.746
(3.563)
(3.797)
(2.438)
(1.635)
(4.610)
(−5.183)
−1.230
(−5.184)
−1.178
(−1.850)
−0.735
(−2.567)
−1.080
(−3.308)
(−9.431)
−0.475
(−9.891)
−0.480
(−5.693)
−0.468
(−5.058)
−0.590
(−8.804)
0.010
—
—
—
—
−0.012
—
—
—
—
(0.812)
−0.846
−0.369
(−0.928)
—
0.013
0.164
0.140
0.003
(1.335)
(2.007)
(1.307)
(0.363)
−0.052
—
—
—
—
0.034
—
—
—
—
−0.043
(−2.852)
−0.096
(−1.910)
−0.075
(−1.018)
(−2.349)
ln L∗t−1
ln
Lt−1
L∗
t−1
ln Pt−1
∗
ln Pt−1
N
(1.547)
—
(−2.447)
0.424
0.436
0.574
0.732
−0.020
0.382
(5.717)
(6.169)
(3.178)
(2.512)
(4.814)
(−6.288)
−0.535
(−6.514)
−0.540
(−3.289)
−0.730
(−2.630)
−0.944
(−4.167)
260
260
260
234
234
−0.400
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3) to
(5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes (real)
GDP. In (5), the number of lagged dependent variables (one) is chosen in order to reject autocorrelation
of order 2.
14
Table 17: Productivity (Long Run), Benchmark is Italy
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
z
ln zit−1
∗
it−1
ln θit−1
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
0.169
(5)
IV
0.143
(6)
IV
(7)
GMM
(1.280)
(1.037)
(−0.269)
−0.043
(5.768)
0.322
0.093
—
—
—
—
—
—
−0.208
—
—
—
—
—
—
(1.374)
(−2.932)
—
0.182
0.166
(3.203)
0.190
1.070
(5.831)
0.342
1.083
(5.039)
0.317
1.145
(5.090)
0.292
0.859
(3.343)
0.403
0.152
(2.264)
0.087
(2.992)
(3.280)
(3.652)
(3.245)
(2.789)
(1.488)
(1.477)
(−5.311)
−0.068
(−5.449)
−0.064
(−4.983)
−0.098
(−4.612)
−0.097
(−4.547)
−0.117
(−2.915)
−0.134
(−4.595)
(−5.477)
−0.375
(−5.519)
−0.367
(−4.873)
−0.517
(−4.642)
−0.595
(−3.044)
−0.484
(−2.520)
−0.402
(−6.304)
−0.018
—
—
—
—
—
—
0.008
—
—
—
—
—
—
(−0.588)
−0.028
(−0.016)
−0.004
(0.213)
(0.773)
(−0.421)
−0.138
(0.871)
0.418
—
—
—
—
—
—
−0.205
—
—
—
—
—
—
−0.059
−0.309
(−0.313)
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
ln L∗t−1
ln
Lt−1
L∗
t−1
ln wit−1
(0.120)
—
(4.041)
0.072
0.254
0.036
(−1.757)
—
0.306
0.538
0.578
0.239
0.544
0.136
(3.282)
(1.939)
(1.695)
(0.624)
(1.631)
(1.822)
−0.104
—
—
—
—
—
—
0.150
—
—
—
—
—
—
(−2.634)
−0.143
(−1.433)
−0.303
(−1.068)
−0.283
(0.225)
(−0.591)
−0.165
(−0.674)
260
260
234
234
234
234
(−1.697)
∗
ln wit−1
ln
N
wit−1
∗
wit−1
(2.196)
—
260
0.074
−0.030
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
to (7) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (5) wages
are instrumented by the average income tax rate for married individuals and in (6) the number of firms
is further instrumented by its own lags. Lt denotes (real) GDP. In (7), the number of lagged dependent
variables (one) is chosen in order to reject autocorrelation of order 2.
15
Table 18: Markups (Long Run), Benchmark is Italy
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
(5)
GMM
(−0.277)
−0.024
(4.092)
0.252
−0.009
—
—
—
—
0.017
—
—
—
—
(−1.457)
−0.016
(−1.269)
−0.037
(−1.090)
−0.037
(−3.068)
−0.026
(−1.511)
−0.022
(−0.972)
−0.017
(−3.063)
(−0.649)
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
(1.155)
—
−0.027
(−2.119)
∗
∆ ln Dit
ln
μit−1
μ∗
it−1
ln θit−1
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
0.006
(−2.156)
0.006
0.010
0.010
−0.044
−0.036
0.003
(2.442)
(2.616)
(3.191)
(2.957)
(1.200)
(−8.492)
−0.501
(−9.036)
−0.520
(−8.199)
−0.555
(−6.571)
−0.635
(−8.455)
0.014
—
—
—
—
−0.008
—
—
—
—
(1.544)
−0.409
(−0.791)
—
0.013
0.067
0.085
0.002
(1.873)
(3.541)
(3.318)
(0.382)
−0.029
—
—
—
—
−0.013
—
—
—
—
(−0.829)
−0.007
(−3.142)
−0.058
(−2.970)
−0.067
(1.167)
260
260
234
234
(−2.071)
ln L∗t−1
L
(−0.946)
ln Lt−1
∗
—
N
260
t−1
0.008
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3) to
(5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes (real)
GDP. In (5), the number of lagged dependent variables (one) is chosen in order to reject autocorrelation
of order 2.
16
5
EU Imports
5.1
Short Run
Table 19: Prices (Short Run), EU Imports, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
—
—
−0.023
(−1.893)
(−2.325)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
0.026
0.021
—
−0.029
—
—
—
—
0.027
—
—
—
—
(−4.507)
−0.028
(−3.712)
−0.226
(−3.785)
−0.239
(−2.705)
−0.015
(−2.567)
−0.056
(−2.623)
−0.059
(−2.328)
—
0.005
∆ ln Pt
—
∆ ln Pt∗
—
N
800
0.003
(1.443)
0.443
0.170
(2.209)
(−3.219)
—
(2.814)
(7)
IV
—
—
−0.008
(6)
IV
0.070
(3.280)
(−0.740)
(5)
IV
(2.090)
0.070
(2.422)
−0.008
(4)
OLS
(2.084)
(2.836)
(−0.697)
∗
∆ ln Dit
−0.018
(3)
OLS
−0.015
(−1.482)
0.003
(1.661)
0.507
(−1.483)
0.003
(1.807)
0.508
0.018
0.020
(3.453)
(3.922)
0.194
—
(5.458)
(6.348)
(6.373)
(1.352)
−0.445
−0.591
(−6.980)
−0.590
(−6.986)
−0.204
—
(−5.346)
(−1.397)
800
720
720
800
800
−0.288
−0.068
0.023
(2.628)
0.094
(0.412)
−0.103
(−0.399)
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (5)
to (7) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
17
Table 20: Productivity (Short Run), EU Imports, all country pairs
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
N
(1)
OLS
—
(2)
OLS
(3)
OLS
(4)
IV
−0.072
−0.074
—
(−1.924)
(−1.971)
0.009
—
—
—
−0.084
—
—
—
(−0.105)
−0.003
(0.256)
(−2.459)
−0.073
(−2.680)
—
—
0.132
0.050
(2.112)
0.157
0.172
(5)
IV
−0.063
(−0.628)
1.002
(3.922)
0.373
1.535
(3.043)
0.482
(3.544)
(4.050)
(4.561)
(4.115)
(3.310)
(−6.157)
−0.036
(−6.173)
−0.037
(−5.958)
−0.033
(−4.872)
−0.100
(−3.604)
800
720
720
800
720
−0.136
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
Table 21: Markups (Short Run), EU Imports, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
—
−0.011
(−0.995)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
0.016
N
(3)
OLS
(4)
IV
−0.223
−0.224
—
(−5.921)
(−5.937)
−0.016
—
—
—
0.023
—
—
—
(−2.570)
−0.020
(0.188)
(0.403)
−0.050
(−2.100)
−0.034
(−2.260)
(2.223)
—
—
−0.038
0.005
(5)
IV
−0.223
(−5.772)
(−1.440)
(1.589)
(−3.041)
∗
∆ ln Dit
(2)
OLS
−0.049
(−3.896)
(−4.118)
0.006
0.006
0.009
0.004
0.025
−0.041
0.003
(2.756)
(3.138)
(3.175)
(0.985)
(0.568)
800
720
720
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
18
5.2
Long Run
Table 22: Prices (Long Run), EU Imports, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.009
—
—
—
0.007
—
—
—
(−1.322)
−0.008
(−1.322)
−0.008
(−0.705)
−0.026
(−0.450)
−0.007
(−0.724)
−0.006
(−1.964)
−0.025
(−1.464)
0.026
(0.535)
(−1.102)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
(0.826)
(−0.772)
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
p
ln pit−1
∗
it−1
ln θit−1
ln θ ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
0.001
(0.542)
0.621
0.001
(0.699)
0.618
0.004
(1.298)
0.645
−0.025
−0.020
0.005
(1.037)
0.480
(6.142)
(6.271)
(4.514)
(2.075)
−0.927
(−7.311)
−0.925
(−4.705)
−0.926
(−3.302)
−0.424
(−7.251)
−0.886
(−17.986)
−0.424
(−18.007)
(−7.683)
−0.333
(−6.637)
0.013
—
—
—
−0.009
—
—
—
(2.150)
−0.321
(−1.681)
—
0.010
0.075
0.085
(2.430)
(2.825)
(3.172)
−0.059
—
—
—
0.060
—
—
—
−0.060
(−2.935)
−0.043
(−2.391)
(−4.898)
ln L∗t−1
ln
Lt−1
L∗
t−1
ln Pt−1
∗
ln Pt−1
N
(5.132)
—
(−5.937)
0.291
(9.466)
−0.360
0.290
(9.575)
−0.355
0.226
−0.041
0.193
(5.371)
(2.197)
(−10.160)
(−10.171)
(−6.940)
−0.334
(−3.371)
−0.329
800
800
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3) and (4) instruments for openness include cif/fob, EU directives interacted
with NTBs, weighted distance interacted with the elasticity of substitution, weight to value
and 1992 and 1999 dummies. Lt denotes (real) GDP.
19
Table 23: Productivity (Long Run), EU Imports, all country pairs
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
(5)
IV
(−0.104)
−0.007
(0.071)
(−0.233)
0.005
(6)
IV
−0.018
−0.014
—
—
—
—
—
−0.062
—
—
—
—
—
(−0.441)
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
ln
zit−1
∗
zit−1
ln θit−1
(−2.069)
—
0.110
0.029
0.548
(1.336)
(3.835)
0.121
0.292
0.605
(3.402)
0.273
0.708
(3.516)
0.274
0.736
(4.003)
0.287
(3.109)
(3.595)
(4.520)
(4.095)
(4.009)
(1.818)
−0.031
(−5.679)
−0.029
(−5.424)
−0.063
(−5.150)
−0.067
(−4.382)
−0.076
(−4.704)
−0.317
(−5.683)
−0.321
−0.101
(−10.337)
(−10.218)
(−6.924)
−0.370
(−6.382)
−0.411
(−4.445)
−0.381
(−4.169)
−0.338
−0.067
—
—
—
—
—
0.088
—
—
—
—
—
(−3.831)
−0.069
(−3.344)
−0.338
(−2.131)
−0.273
(−1.337)
−0.153
(−1.353)
0.256
—
—
—
—
—
−0.265
—
—
—
—
—
(−3.075)
ln θ∗it−1
ln
θ it−1
θ∗
it−1
ln Lt−1
ln L∗t−1
ln
Lt−1
L∗
t−1
ln wit−1
(3.495)
—
(5.396)
−0.145
(−5.757)
—
0.259
0.448
0.455
0.349
0.293
(6.562)
(6.072)
(5.311)
(2.483)
(2.606)
−0.060
—
—
—
—
—
0.145
—
—
—
—
—
(−4.550)
−0.104
(−5.006)
−0.416
(−3.910)
−0.355
(−1.168)
−0.193
(−0.823)
800
800
720
720
720
(−2.046)
∗
ln wit−1
ln
N
wit−1
∗
wit−1
(4.992)
—
800
−0.097
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
to (6) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (5) wages
are instrumented by the average income tax rate for married individuals and in (6) the number of firms
is further instrumented by its own lags. Lt denotes (real) GDP.
20
Table 24: Markups (Long Run), EU Imports, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.008
—
—
—
0.006
—
—
—
(−1.195)
−0.008
(1.352)
(1.420)
−0.037
(−2.038)
−0.026
(−1.902)
0.046
(1.061)
(−0.847)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
(0.623)
—
−0.040
(−3.653)
∗
∆ ln Dit
ln
μit−1
μ∗
it−1
ln θit−1
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
0.005
(2.787)
(−3.526)
0.005
(3.277)
0.002
(0.915)
−0.540
0.051
−0.026
0.002
(0.636)
(−15.895)
−0.544
(−16.070)
(−15.336)
(−12.630)
0.008
—
—
—
−0.016
—
—
—
(1.274)
−0.545
0.040
−0.602
(−2.618)
—
0.012
0.022
0.027
(2.551)
(1.663)
(1.603)
−0.028
—
—
—
0.015
—
—
—
(−3.410)
−0.022
(−3.449)
−0.024
(−2.680)
800
800
720
(−2.931)
ln L∗t−1
ln
N
Lt−1
L∗
t−1
(1.616)
—
800
−0.023
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3) and (4) instruments for openness include cif/fob, EU directives interacted
with NTBs, weighted distance interacted with the elasticity of substitution, weight to value
and 1992 and 1999 dummies. Lt denotes (real) GDP.
21
6
Non-EU Imports
6.1
Short Run
Table 25: Prices (Short Run), Non-EU Imports, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
—
—
−0.015
(−2.164)
(−1.822)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
0.012
0.007
—
−0.024
—
—
—
—
0.013
—
—
—
—
(−3.203)
−0.018
(−4.964)
−0.117
(−4.704)
−0.111
(−4.851)
−0.014
(−2.340)
−0.034
(−2.298)
−0.033
(−2.747)
—
0.003
∆ ln Pt
—
∆ ln Pt∗
—
N
800
0.001
(0.613)
0.457
0.036
(0.833)
(−3.036)
—
(2.065)
(7)
IV
—
—
−0.010
(6)
IV
0.057
(1.593)
(−0.865)
(5)
IV
(1.667)
0.056
(0.878)
−0.007
(4)
OLS
(1.642)
(1.389)
(−0.639)
∗
∆ ln Dit
−0.018
(3)
OLS
−0.016
(−1.512)
0.001
(0.496)
0.542
(−1.322)
0.001
(0.599)
0.546
0.003
0.005
(1.637)
(2.703)
0.412
—
(5.641)
(6.784)
(6.843)
(4.237)
−0.485
−0.650
(−7.598)
−0.635
(−7.527)
−0.464
—
(−5.710)
(−4.669)
800
720
720
800
800
−0.133
−0.040
0.003
(1.490)
0.502
(4.901)
−0.587
(−5.410)
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (5)
to (7) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
22
Table 26: Productivity (Short Run), Non-EU Imports, all country pairs
(1)
OLS
Method
z
∆ ln zit−1
∗
—
it−1
∆ ln θit
0.055
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
N
(3)
OLS
(4)
IV
−0.082
−0.080
—
(−2.178)
(−2.141)
0.069
—
—
—
−0.025
—
—
—
(2.024)
(2.296)
(−0.635)
−0.017
(−0.851)
—
—
0.159
∗
∆ ln Dit
(2)
OLS
0.047
(2.140)
0.184
0.173
(5)
IV
−0.139
(−2.785)
0.405
(4.992)
0.247
0.489
(4.566)
0.280
(4.203)
(4.700)
(4.579)
(5.078)
(5.131)
(−5.645)
−0.030
(−5.589)
−0.030
(−5.708)
−0.031
(−5.675)
−0.037
(−5.294)
800
720
720
800
720
−0.037
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
Table 27: Markups (Short Run), Non-EU Imports, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
—
−0.020
(−2.224)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
0.017
N
(3)
OLS
(4)
IV
−0.226
−0.226
—
(−6.024)
(−6.016)
−0.019
—
—
—
0.028
—
—
—
(−3.368)
−0.024
(−4.012)
−0.098
(−4.235)
−0.051
(−4.241)
−0.062
(−4.823)
(2.909)
—
—
−0.042
0.005
(5)
IV
−0.237
(−5.364)
(−2.010)
(1.833)
(−3.313)
∗
∆ ln Dit
(2)
OLS
−0.049
(−3.906)
(−4.239)
0.005
0.005
0.006
−0.132
−0.076
0.006
(2.542)
(2.798)
(2.753)
(3.044)
(3.100)
800
720
720
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
23
6.2
Long Run
Table 28: Prices (Long Run), Non-EU Imports, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.006
—
—
—
−0.006
—
—
—
0.006
(0.136)
(−0.827)
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
(−0.861)
—
−0.006
(−0.683)
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
ln
pit−1
p∗
it−1
ln θit−1
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
0.000
(0.316)
0.715
(0.006)
0.000
(−2.153)
−0.037
(−1.845)
−0.003
(−1.268)
−0.013
(−1.159)
(−0.376)
0.001
(0.408)
0.697
0.002
(1.105)
0.708
−0.045
−0.013
0.003
(1.584)
0.713
(7.022)
(7.070)
(5.524)
(4.097)
−0.890
(−7.008)
−0.877
(−5.558)
−0.789
(−4.232)
(−7.086)
(−18.279)
−0.422
(−18.349)
(−14.397)
(−11.018)
0.019
—
—
—
−0.017
—
—
—
(3.721)
−0.423
−0.417
−0.666
−0.377
(−3.039)
—
0.018
0.018
0.042
(4.310)
(0.948)
(1.856)
−0.073
—
—
—
0.070
—
—
—
−0.071
(−5.547)
−0.075
(−5.470)
(−6.089)
ln L∗t−1
ln
Lt−1
L∗
t−1
ln Pt−1
∗
ln Pt−1
N
(5.738)
—
(−7.030)
0.316
(10.420)
−0.359
0.312
(10.412)
−0.358
0.302
−0.090
0.277
(8.883)
(4.062)
(−10.301)
(−10.327)
(−8.871)
−0.333
(−4.502)
−0.297
800
800
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
and (4) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes
(real) GDP.
24
Table 29: Productivity (Long Run), Non-EU Imports, all country pairs
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
∆ ln θ∗it
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
z
ln zit−1
∗
it−1
ln θit−1
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(4)
IV
(5)
IV
(6)
IV
(−0.971)
−0.057
(−1.164)
−0.071
(−1.270)
−0.072
0.057
—
—
—
—
—
−0.018
—
—
—
—
—
(2.082)
(−0.660)
—
0.132
0.040
(1.998)
0.115
0.279
(4.124)
0.185
0.357
(4.142)
0.200
0.379
(4.045)
0.199
0.314
(3.364)
0.081
(3.663)
(3.383)
(4.358)
(4.057)
(3.982)
(0.710)
(−5.047)
−0.026
(−5.374)
−0.027
(−5.103)
−0.029
(−4.418)
−0.028
(−3.876)
−0.032
(−3.355)
(−9.779)
−0.320
(−10.111)
−0.318
(−8.178)
−0.324
(−6.538)
−0.333
(−4.540)
−0.301
(−4.569)
−0.009
—
—
—
—
—
0.005
—
—
—
—
—
(−0.506)
−0.008
(−0.763)
−0.056
(−0.969)
−0.102
(−0.817)
−0.088
(−0.564)
0.256
—
—
—
—
—
−0.219
—
—
—
—
—
−0.050
−0.252
(−0.396)
ln θ∗it−1
θ
ln θit−1
∗
it−1
ln Lt−1
ln L∗t−1
ln
Lt−1
L∗
t−1
ln wit−1
(0.212)
—
(5.207)
−0.061
(−4.222)
—
0.242
0.309
0.349
0.282
0.162
(5.843)
(4.345)
(3.478)
(1.943)
(1.229)
−0.039
—
—
—
—
—
0.062
—
—
—
—
—
(−2.791)
−0.057
(−3.325)
−0.125
(−2.692)
−0.142
(−0.628)
−0.073
(0.736)
800
800
720
720
720
(−1.206)
∗
ln wit−1
ln
N
wit−1
∗
wit−1
(2.665)
—
800
0.074
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
to (6) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (5) wages
are instrumented by the average income tax rate for married individuals and in (6) the number of firms
is further instrumented by its own lags. Lt denotes (real) GDP.
25
Table 30: Markups (Long Run), Non-EU Imports, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.013
—
—
—
0.015
—
—
—
(−2.306)
−0.014
(−1.769)
−0.034
(−2.077)
−0.039
(−3.378)
−0.042
(−3.181)
0.007
(0.155)
(−1.493)
∆ ln θ∗it
∆ ln
θ it
θ∗
it
∆ ln Dit
(1.758)
—
−0.040
(−3.631)
∗
∆ ln Dit
ln
μit−1
μ∗
it−1
ln θit−1
ln θ∗it−1
ln
θ it−1
θ∗
it−1
ln Lt−1
0.004
(2.691)
(−3.690)
0.004
(2.748)
0.006
(3.118)
(−15.882)
(−13.226)
(−9.869)
0.000
—
—
—
—
—
—
(−0.761)
−0.004
(1.724)
(1.805)
−0.028
—
—
—
0.007
—
—
—
(−2.307)
−0.018
(−2.882)
−0.044
(−2.675)
800
800
720
(−0.089)
0.008
(1.184)
—
−0.508
−0.045
−0.543
(−15.743)
−0.545
0.005
(3.237)
−0.051
0.028
−0.534
0.036
(−2.616)
ln L∗t−1
ln
N
Lt−1
L∗
t−1
(0.642)
—
800
−0.051
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
and (4) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes
(real) GDP.
26
7
Non-Linearities
7.1
Short Run
Table 31: Prices (Short Run), Non-Linearities, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
—
—
−0.022
(−1.843)
(−1.737)
∆ ln θ∗it
0.024
2
(∆ ln θit )
(∆ ln θ∗it )2
θ it
θ∗
it
∆ ln
2
∆ ln θθit
∗
it
∆ ln Dit
0.020
—
−0.044
—
—
—
—
0.028
—
—
—
—
0.055
—
—
—
—
−0.083
—
—
—
—
(−3.825)
−0.027
(−4.456)
−0.195
(−4.316)
−0.194
(−3.654)
(−0.874)
−0.023
(1.647)
(1.667)
(1.880)
−0.016
(−2.521)
−0.046
(−2.417)
−0.044
(−2.645)
(−0.112)
−0.006
(1.052)
(−2.126)
−0.097
(−1.818)
−0.081
(−2.043)
—
—
—
0.006
(3.132)
∆ ln Pt
—
∆ ln Pt∗
—
N
800
−0.010
0.003
(1.685)
0.447
0.083
(1.336)
(−3.519)
−0.019
(−0.910)
(7)
IV
—
(−0.350)
−0.008
(6)
IV
0.065
(2.972)
—
(5)
IV
(1.940)
0.070
(2.038)
—
(4)
OLS
(2.074)
(2.460)
(−0.734)
∗
∆ ln Dit
−0.023
(3)
OLS
—
−0.019
(−1.819)
0.003
(1.892)
0.518
(−1.521)
0.003
(1.631)
0.524
0.386
0.006
0.419
0.007
(1.200)
(1.523)
0.428
—
(5.526)
(6.515)
(6.583)
(3.467)
−0.451
−0.601
(−7.083)
−0.607
(−7.195)
−0.449
—
(−5.385)
(−3.600)
800
720
720
800
800
−0.286
0.571
−0.063
0.007
(1.341)
0.468
(2.921)
−0.493
(−2.857)
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (5)
to (7) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
27
Table 32: Productivity (Short Run), Non-Linearities, all country pairs
(1)
OLS
Method
z
∆ ln zit−1
∗
—
it−1
∆ ln θit
0.048
∆ ln θ∗it
(∆ ln θit )2
it
∆ ln Dit
N
−0.076
−0.076
—
(−2.034)
(−2.027)
0.060
—
—
—
−0.073
—
—
—
0.008
—
—
—
0.011
—
—
—
(−1.910)
−0.063
(−2.075)
−0.039
(0.038)
(0.342)
(0.074)
—
—
—
—
0.148
∗
∆ ln Dit
(4)
IV
(1.251)
0.052
∆ ln θθit
∗
it
2
∆ ln θθit
∗
(3)
OLS
(1.164)
(−0.215)
(∆ ln θ∗it )2
(2)
OLS
0.064
(2.328)
0.042
(0.411)
0.173
0.176
(5)
IV
−0.274
(−2.221)
0.823
1.601
(4.003)
(3.379)
−3.569
(−2.701)
(−3.098)
0.292
−5.450
0.437
(3.873)
(4.357)
(4.658)
(3.487)
(3.100)
(−5.582)
−0.034
(−5.485)
−0.034
(−6.013)
−0.034
(−0.906)
−0.019
(−0.923)
800
720
720
800
720
−0.029
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
Table 33: Markups (Short Run), Non-Linearities, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
—
−0.009
(−0.652)
∆ ln θ∗it
0.013
(∆ ln θit )2
∆ ln θθit
∗
it
2
∆ ln θθit
∗
it
∆ ln Dit
N
(4)
IV
−0.241
−0.225
—
(−6.435)
(−5.969)
−0.005
—
—
—
0.023
—
—
—
−0.144
—
—
—
0.151
—
—
—
−0.029
(−0.740)
−0.056
(0.355)
−0.111
(−2.239)
0.120
(2.383)
(3.030)
—
—
(−3.289)
—
−0.040
0.003
(5)
IV
−0.063
(−0.608)
(−0.302)
(2.077)
(−3.110)
∗
∆ ln Dit
(3)
OLS
(1.222)
(−1.813)
(∆ ln θ∗it )2
(2)
OLS
—
0.016
−0.048
(−3.789)
(0.492)
(−3.553)
−1.502
(−2.970)
−0.052
(−2.218)
−0.068
(−1.731)
(−4.270)
0.004
0.045
0.006
0.030
−1.725
−0.063
0.028
(1.688)
(1.905)
(3.109)
(3.861)
(3.297)
800
720
720
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (4)
and (5) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies.
28
7.2
Long Run
Table 34: Prices (Long Run), Non-Linearities, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.015
—
—
—
0.003
—
—
—
0.037
—
—
—
−0.065
—
—
—
(−0.563)
−0.004
(−1.430)
−0.053
(−1.654)
(−1.036)
−0.024
(0.968)
(1.485)
−0.005
(−1.683)
−0.021
(−1.545)
0.018
(0.256)
(−1.453)
∆ ln θ∗it
(0.314)
2
(∆ ln θit )
(0.846)
(∆ ln θ∗it )2
θ it
θ∗
it
∆ ln
2
∆ ln θθit
∗
it
∆ ln Dit
(−1.799)
—
—
−0.009
(−0.963)
∗
∆ ln Dit
0.001
(0.958)
∆ ln Pt
0.664
∆ ln Pt∗
ln
ln θit−1
0.641
0.003
(0.852)
0.723
−0.027
0.003
(0.827)
0.481
(6.494)
(5.024)
(1.989)
−0.916
(−7.235)
−0.911
(−4.753)
−0.809
(−2.541)
(−17.434)
−0.416
(−17.657)
−0.418
(−6.674)
−0.352
(−5.029)
0.017
—
—
—
−0.010
—
—
—
−0.001
—
—
—
0.004
—
—
—
(2.198)
ln θ∗it−1
0.001
(0.765)
0.409
(6.473)
(−7.208)
pit−1
p∗
it−1
(−0.600)
0.177
−0.139
−0.668
−0.289
(−1.467)
2
(ln θit−1 )
(−0.380)
(ln θ∗it−1 )2
θ it−1
θ∗
it−1
ln
2
θ
ln θit−1
∗
it−1
ln Lt−1
(1.134)
—
—
0.014
(2.925)
0.000
0.051
0.057
(1.444)
(1.141)
(−0.093)
(−0.799)
−0.014
(0.330)
0.006
−0.061
—
—
—
0.062
—
—
—
−0.063
(−5.044)
−0.073
(−3.433)
(−5.074)
ln L∗t−1
ln
Lt−1
L∗
t−1
ln Pt−1
∗
ln Pt−1
N
(5.233)
—
(−6.294)
0.298
(9.700)
−0.361
0.292
(9.683)
−0.353
0.250
−0.078
0.109
(5.810)
(0.973)
(−10.223)
(−10.032)
(−4.672)
−0.287
(−1.372)
−0.191
800
800
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
and (4) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes
(real) GDP.
29
Table 35: Productivity (Long Run), Non-Linearities, all country pairs
Method
z
∆ ln zit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
—
—
—
(5)
IV
(6)
IV
(−1.455)
−0.237
(−1.059)
−0.145
(−1.344)
−0.219
0.052
—
—
—
—
—
−0.053
—
—
—
—
—
−0.048
—
—
—
—
—
0.047
—
—
—
—
—
(1.309)
∆ ln θ∗it
(4)
IV
(−1.612)
(∆ ln θit )2
(−0.279)
(∆ ln θ∗it )2
∆ ln θθit
∗
it
2
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
ln
zit−1
∗
zit−1
ln θit−1
(0.333)
—
—
0.125
0.051
(2.058)
0.020
(0.220)
0.120
0.424
1.138
1.287
1.305
(2.202)
(2.470)
(2.999)
(2.700)
−2.035
(−2.495)
−4.576
(−2.712)
−4.900
(−2.443)
(−2.069)
0.281
0.385
0.382
−4.971
0.643
(3.457)
(3.521)
(3.549)
(2.966)
(2.977)
(1.744)
(−5.091)
−0.029
(−5.643)
−0.029
(−1.073)
−0.018
(−0.471)
−0.011
(−0.324)
−0.009
(−0.123)
(−9.954)
−0.315
(−9.961)
−0.312
(−3.513)
−0.269
(−2.988)
−0.432
(−2.984)
−0.498
(−2.715)
−0.055
—
—
—
—
—
0.046
—
—
—
—
—
−0.001
—
—
—
—
—
−0.020
—
—
—
—
—
(−2.778)
−0.058
(−2.748)
−0.580
(−1.049)
−0.418
(−0.519)
−0.144
(−0.596)
(−0.526)
−0.003
(1.585)
(1.105)
(0.705)
(1.270)
0.271
—
—
—
—
—
−0.262
—
—
—
—
—
−0.006
−0.459
(−1.803)
ln θ∗it−1
(1.534)
2
(ln θit−1 )
(−0.045)
(ln θ∗it−1 )2
θ it−1
θ∗
it−1
ln
2
θ
ln θit−1
∗
it−1
ln Lt−1
ln L∗t−1
ln
Lt−1
L∗
t−1
ln wit−1
(−1.559)
—
—
(5.481)
0.120
0.129
0.077
−0.186
0.182
(−5.328)
—
0.264
0.558
0.666
0.559
0.556
(6.568)
(4.822)
(3.038)
(1.984)
(2.084)
−0.065
—
—
—
—
—
0.112
—
—
—
—
—
(−4.050)
−0.093
(−3.887)
−0.527
(−2.166)
−0.508
(−1.219)
−0.368
(−1.301)
800
800
720
720
720
(−2.031)
∗
ln wit−1
w
(3.971)
ln wit−1
∗
—
N
800
it−1
−0.379
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
to (6) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. In (5) wages
are instrumented by the average income tax rate for married individuals and in (6) the number of firms
is further instrumented by its own lags. Lt denotes (real) GDP.
30
Table 36: Markups (Long Run), Non-Linearities, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln θit
(1)
OLS
(2)
OLS
(3)
IV
(4)
IV
—
—
—
−0.007
—
—
—
0.005
—
—
—
−0.073
—
—
—
0.091
—
—
—
−0.014
(1.243)
(1.900)
0.163
(1.274)
(−0.603)
∆ ln θ∗it
(0.510)
2
(∆ ln θit )
(−1.388)
(∆ ln θ∗it )2
θ it
θ∗
it
∆ ln
2
∆ ln θθit
∗
it
∆ ln Dit
(2.083)
—
(−1.812)
—
−0.039
(−3.455)
∗
∆ ln Dit
ln
0.003
(1.747)
μit−1
μ∗
it−1
ln θit−1
(ln θit−1 )
(ln θ∗it−1 )2
ln
2
θ
ln θit−1
∗
it−1
ln Lt−1
(0.455)
(−3.034)
−0.995
(−2.632)
−0.038
(−1.355)
−0.030
(0.082)
(−3.558)
0.005
(3.044)
−0.543
0.019
−1.785
0.003
0.023
(3.426)
(2.602)
−0.541
(−15.908)
(−6.765)
−0.454
(−4.574)
−0.605
0.015
—
—
—
−0.012
—
—
—
0.008
—
—
—
−0.001
—
—
—
(−1.511)
2
θ it−1
θ∗
it−1
0.279
(−15.783)
(1.878)
ln θ∗it−1
0.013
0.072
(2.063)
(−0.369)
—
—
0.008
(1.460)
0.000
0.086
0.148
(2.134)
(1.895)
(−0.054)
(−0.312)
−0.007
(−0.480)
−0.019
−0.025
—
—
—
0.017
—
—
—
(−3.436)
−0.024
(−2.895)
−0.057
(−2.046)
800
800
720
(−2.414)
ln L∗t−1
ln
N
Lt−1
L∗
t−1
(1.705)
—
800
−0.080
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. In (3)
and (4) instruments for openness include cif/fob, EU directives interacted with NTBs, weighted distance
interacted with the elasticity of substitution, weight to value and 1992 and 1999 dummies. Lt denotes
(real) GDP.
31
8
8.1
Instrumenting Number of Firms
Short Run
Table 37: Prices (Short Run), IV Number of Firms, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln
θ it
θ∗
it
∆ ln Dit
(1)
IV
(2)
IV
—
—
(−3.703)
−0.156
(−3.699)
−0.157
(−2.939)
−0.103
(−2.020)
−0.092
(−2.200)
(−1.633)
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
N
0.025
0.028
(4.371)
(5.071)
0.268
—
−0.186
—
800
800
(2.071)
(−1.370)
(3)
IV
0.108
(2.201)
−0.161
−0.129
0.027
(4.824)
0.289
(1.913)
−0.174
(−1.188)
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness and the number of firms include cif/fob, EU directives
interacted with NTBs, weighted distance interacted with the elasticity of substitution,
weight to value and 1992 and 1999 dummies.
32
Table 38: Productivity (Short Run), IV Number of Firms, all country pairs
Method
z
∆ ln zit−1
∗
it−1
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
N
(1)
IV
—
(2)
IV
−0.138
(−2.334)
0.597
(3.870)
0.544
0.695
(3.027)
0.677
(3.289)
(3.718)
(−6.356)
−0.126
(−5.942)
800
720
−0.128
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness and the number of firms include cif/fob, EU directives
interacted with NTBs, weighted distance interacted with the elasticity of substitution,
weight to value and 1992 and 1999 dummies.
Table 39: Markups (Short Run), IV Number of Firms, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln
θ it
θ∗
it
∆ ln Dit
(1)
IV
—
N
−0.223
(−5.256)
(−2.130)
−0.086
(−2.120)
−0.148
(−3.185)
(−3.421)
∗
∆ ln Dit
(2)
IV
0.017
−0.118
−0.136
0.020
(3.347)
(3.951)
800
720
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness and the number of firms include cif/fob, EU directives
interacted with NTBs, weighted distance interacted with the elasticity of substitution,
weight to value and 1992 and 1999 dummies.
33
8.2
Long Run
Table 40: Prices (Long Run), IV Number of Firms, all country pairs
Method
p
∆ ln pit−1
∗
it−1
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
∆ ln Pt
∆ ln Pt∗
p
ln pit−1
∗
it−1
θ
ln θit−1
∗
it−1
ln
Lt−1
L∗
t−1
ln Pt−1
∗
ln Pt−1
N
(1)
IV
—
(2)
IV
−0.037
(−0.543)
−0.023
(−0.722)
0.056
(1.033)
0.010
(2.054)
0.659
−0.042
(−0.912)
0.070
(1.176)
0.011
(1.647)
0.456
(4.351)
(1.891)
(−3.146)
−0.687
(−1.849)
−0.314
(−4.816)
(−5.558)
0.093
−0.594
−0.284
0.116
(2.368)
(2.700)
−0.079
(−4.346)
(−5.273)
0.215
−0.093
0.140
(4.769)
(1.527)
(−4.842)
−0.264
(−1.986)
800
720
−0.212
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness and the number of firms include cif/fob, EU directives
interacted with NTBs, weighted distance interacted with the elasticity of substitution,
weight to value and 1992 and 1999 dummies. Lt denotes (real) GDP.
34
Table 41: Productivity (Long Run), IV Number of Firms, all country pairs
Method
z
∆ ln zit−1
∗
it−1
∆ ln θθit
∗
it
∆ ln Dit
∗
∆ ln Dit
ln
zit−1
∗
zit−1
θ
ln θit−1
∗
it−1
(1)
IV
—
(2)
IV
(3)
IV
(4)
IV
−0.198
(−1.808)
−0.119
(−1.630)
(−1.977)
0.085
0.238
0.425
−0.111
0.530
(0.346)
(1.159)
(2.821)
(−1.595)
−0.835
(−0.722)
−0.235
(1.976)
(1.838)
(−0.904)
−0.032
(−1.999)
−0.050
(−4.329)
−0.084
(−4.456)
(−1.446)
−0.160
(−2.913)
−0.248
(−3.402)
−0.258
(−3.606)
−1.245
(−2.800)
−0.871
(−2.423)
−0.331
(−2.044)
(−2.842)
0.258
(3.559)
0.242
−0.077
−0.246
−0.271
ln
Lt−1
L∗
t−1
(3.951)
(4.387)
(2.575)
(2.697)
ln
wit−1
∗
wit−1
(−3.166)
−0.823
(−3.325)
−0.601
(−1.170)
−0.198
(−1.026)
800
720
720
720
N
0.751
0.692
0.383
0.302
−0.122
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness and the number of firms include cif/fob, EU directives interacted with NTBs, weighted distance interacted with the elasticity of substitution, weight
to value and 1992 and 1999 dummies. In (3) wages are instrumented by the average income
tax rate for married individuals and in (4) the number of firms is further instrumented by
its own lags. Lt denotes (real) GDP.
35
Table 42: Markups (Long Run), IV Number of Firms, all country pairs
Method
μ
∆ ln μit−1
∗
it−1
∆ ln
θ it
θ∗
it
∆ ln Dit
(1)
IV
(2)
IV
—
0.034
(0.737)
(−1.004)
−0.031
(−0.929)
−0.188
(−2.485)
(−3.013)
∗
∆ ln Dit
ln
μit−1
μ∗
it−1
θ
0.010
(2.499)
−0.534
−0.033
−0.153
0.012
(2.914)
−0.556
(−13.286)
(−10.662)
ln θit−1
∗
it−1
(−0.680)
−0.020
(−0.156)
Lt−1
L∗
t−1
(−2.208)
−0.027
(−2.036)
800
720
ln
N
−0.005
−0.030
Notes: Country/industry fixed effects are included in all regressions, t-statistics in parenthesis. Instruments for openness and the number of firms include cif/fob, EU directives
interacted with NTBs, weighted distance interacted with the elasticity of substitution,
weight to value and 1992 and 1999 dummies. Lt denotes (real) GDP.
36
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