Working Paper Series
Sizing Up the Impact of Embassies on Exports
() and Rikard Forslid
Abstract: The purpose of this study is to test for the effects of
trade promotion via the foreign service. We develop a Melitz-based model
where firms are heterogeneous with respect to productivity and must pay a
beachhead cost to enter a foreign market, which can be reduced by
government spending on trade promotion. The model predicts that unilateral
trade promotion allows medium-sized firms to export. We test this
prediction using Swedish firm-level data and information on the opening and
closing of Swedish embassies abroad using Norwegian firms as control group.
Our results lend support to the predictions of the model, with large and
medium-sized firms responding most strongly to the opening of embassies.
Keywords: Heterogeneous firms; Trade promotion; (follow links to similar papers)
JEL-Codes: D21; D22; F12; F15; (follow links to similar papers)
24 pages, March 4, 2014
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom