Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/red/sed007/891.html
   My bibliography  Save this paper

The Return to Multinational Production and "Global Imbalances"

Author

Listed:
  • Veronica Rappoport

    (Columbia Business School)

  • Natalia Ramondo

    (University of Texas-Austin)

Abstract
Using panel data of firms located in Europe (Amadeus), we compare returns of affiliates of US and non-US multinationals, and explore the sources of their differences. It turns out that US affiliates have 14% higher sales to assets than affiliates of non-US multinational, controlling by destination market. The excess return survives after controlling by industry composition effects. However, the trend during the 90's shows some convergence. Third, decomposing the behavior of returns among source and host country, time, and industry effects shows that returns of US firms mainly co-move with business cycle variables in the US. We present a simple stochastic, general equilibrium, multi-country model with multinational production (MP). MP is introduced by allowing firms to open plants abroad and replicate (at a cost) their home technology. Technologies have a fixed country-industry-specific component, and a stochastic time-varying country-specific aggregate component (the only shock we allow for). Additionally, following Melitz and Ghironi (2005), households can invest in bonds (foreign and domestic) and a mutual fund of domestic firms some of which are multinationals. We calibrate the model to the empirical findings above to capture the persistent US current account deficits and the composition of US international assets and liabilities, namely, the high share of direct investment in US assets relative to its liabilities.

Suggested Citation

  • Veronica Rappoport & Natalia Ramondo, 2007. "The Return to Multinational Production and "Global Imbalances"," 2007 Meeting Papers 891, Society for Economic Dynamics.
    • Handle: RePEc:red:sed007:891
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. McGrattan, Ellen R. & Prescott, Edward C., 2009. "Openness, technology capital, and development," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2454-2476, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed007:891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.