From Local to Global: Offshoring and Asset Prices
98 Pages Posted: 10 Nov 2018 Last revised: 24 Mar 2020
Date Written: March 23, 2020
Industries differ in the extent to which they can offshore their production. I document that industries with low offshoring potential carry a sizeable risk premium compared to industries with high offshoring potential, suggesting that the possibility to offshore affects industry risk. A two-country dynamic trade model in which offshoring allows firms to secure market share against foreign competitors is able to rationalize the empirical findings.
Keywords: Asset Prices, Import Competition, Offshoring
JEL Classification: F11, G12
Suggested Citation: Suggested Citation