Learning and the Value of Relationships in International Trade

55 Pages Posted: 11 Feb 2016

See all articles by Ryan Monarch

Ryan Monarch

Federal Reserve Board

Tim Schmidt-Eisenlohr

Board of Governors of the Federal Reserve System

Multiple version iconThere are 3 versions of this paper

Date Written: February 1, 2016

Abstract

How valuable are long-term supplier relationships? To address this question, this paper explores relationships between U.S. importers and their suppliers abroad. We establish several facts: almost half of U.S. imports involve relationships three years or older, relationship survival and traded quantity increase as a relationship ages, and long-term relationships were more resilient in the 2008-09 financial crisis. We present a model of importer learning and calibrate it using our data. We estimate large differences in the value of relationships across countries. Counterfactuals show that relationships are central to trade dynamics.

Keywords: International Trade, Firm Relationships, Learning, Institutions

JEL Classification: F11, F14, L14, D22

Suggested Citation

Monarch, Ryan and Schmidt-Eisenlohr, Tim, Learning and the Value of Relationships in International Trade (February 1, 2016). US Census Bureau Center for Economic Studies Paper No. CES-WP-16-11. Available at SSRN: https://ssrn.com/abstract=2730326 or http://dx.doi.org/10.2139/ssrn.2730326

Ryan Monarch (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Tim Schmidt-Eisenlohr

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
37
Abstract Views
398
PlumX Metrics