Abstract We examine the propagation of a small unexpected supply shock through production network and role financial constraints play in its transmission. Using data on almost all Turkish supplier-customer links, we exploit heterogeneous impact an import-tax increase for identification. find that this relatively minor had nontrivial economic exposed firms propagated downstream affected suppliers. Importantly, show low-liquidity amplified

We document strong skill matching in Turkish firms' production networks. Additionally, the data, export demand shocks from rich countries increase intensity and their trade with skill-intensive domestic partners. explain these patterns using a quantitative model heterogeneous firms, quality choices, endogenous A counterfactual economy-wide shock of 5% leads both exporters nonexporters to upgrade quality, raising average wage by 1.2%. This effect is nine times scenario without interconnected...

Abstract This study documents a substantial decline in the exports of major trading nations taking place March 2020. Accounting for product-specific seasonality and annual trends, data suggest drop by 38 per cent France, about quarter Turkey Germany, 12 US, relative to their historical averages. Detailed export from Turkey, disaggregated financing terms, show another striking pattern. Flows using bank intermediation which eliminates or reduces risk non-payment non-arrival prepaid goods, such...

We test the trade finance channel of exports by controlling for bank credit channel. Using Turkey's July 2012 adoption Basel II as a quasi-natural experiment, we examine whether shocks to financing costs affect exports. With data 16,662 Turkish exporters shipping 2,888 different products 158 countries, find that share letters-of-credit-based decreases (increases) when associated risk weights counterparty exposure increase (decrease) after II. However, growth firm-product-country-level...

We study a production network where quality choices are interconnected across firms.Highquality firms skill intensive and trade more with other high-quality firms.Using data from Turkish firms, we document strong assortative matching of skills in the network.A firm-specific export demand shock rich country increases firm's intensity shifts firm toward skill-intensive domestic partners.We develop quantitative model heterogeneous endogenous choices, formation.An economy-wide 5 percent induces...

Abstract What is the impact on intra-national trade and regional economic outcomes when quality lane-capacity of an existing paved road network expanded significantly? We investigate this question for case Turkey, which undertook a large-scale public investment in roads during 2000s. Using spatially disaggregated data upgrades domestic transactions, we estimate large positive reduced travel times as well local manufacturing employment wages. A quantitative exercise using workhorse model...

We study a production network where quality choices are interconnected across firms. High-quality firms skill intensive and trade more with other high-quality Using data from Turkish firms, we document strong assortative matching of skills in the network. A firm-specific export demand shock rich country increases firm's intensity shifts firm toward skill-intensive domestic partners. develop quantitative model heterogeneous endogenous choices, formation. An economy-wide 5 percent induces...

We quantify the effect of container technology on transport costs and trade by estimating modal choice between containerization breakbulk shipping using micro-level data. The model is motivated novel facts that relate usage to shipment, destination firm characteristics. find have a higher first-mile cost lower distance elasticity, making it effective in longer distances. At median across all country pairs, box decreases variable 16 22 percent. explains significant amount global increase...

This study argues that the ability to mitigate risks associated with international trade is particularly important at times of heightened uncertainty, such as economic crisis caused by Covid-19 pandemic. Risk mitigation can be achieved through letters credit (LCs), finance instruments providing guarantees trading partners. As their use varies across products, exports some products are more resilient than others during increased uncertainty. situation reverses in financial crises when...