I am professor of economics at the Heinrich Heine University Düsseldorf and the Düsseldorf Institute for Competition Economics (DICE). I am also a research affiliate at CESifo and a member of the Managing Board of the European Trade Study Group. 

My research focuses on international trade, economic geography, trade policy, and firms' integration in international production networks. I am particularly interested in understanding the distributional consequences of globalization on individual firms and on the regions and labor markets they are situated in.

You can find my CV here.

erhardt@dice.hhu.de 


Publications



[Media Coverage: NZZ am Sonntag, L'AGEFI, RTS, 20 Minutes]

    [Best Paper Award at the 18th GEP/CEPR Annual Postgraduate Conference, Best Paper Award at the Annual Congress of the SSES 2019]





Chapters in books 

Working Papers


[CEPR Discussion Paper 15160]


Abstract: This paper reassesses the question of the importance of comparative advantage in a model of international trade with heterogeneous firms where productivity is distributed nonparametrically. This assessment rests on a method of isolating empirical productivity distributions for 15 countries and 17 sectors using a combination of firm-level and macroeconomic data together with the structure of the model. In this setting, the effects of technology on trade are substantial and cannot be captured by a small set of technology parameters. On average, comparative advantage accounts for 23% of the observed variation in trade or 70% in the absence of selection effects.

[CEPR Discussion Paper 19017] [CESifo Working Paper 11041] [IZA DP 16895]


Abstract: This paper identifies the causal effects of trade shocks on worker outcomes. We exploit a unique setting based on three pillars: (i) a large, unanticipated appreciation of the Swiss franc in 2015, (ii) detailed data with firm-level exposure to trade via output markets (both domestic and foreign) and imported inputs (distinguished by their foreign labor content), which we match to (iii) worker-level panel data with rich information on labor-market outcomes. We find that increased competition in output markets induces negative effects on earnings for workers of affected firms. Conversely, a price drop of foreign inputs generates positive effects for workers of importing firms, but less so the higher the labor content of these imported inputs. All these patterns are consistent with a parsimonious model of task-based production. Moreover, positive and negative earnings effects are especially strong for workers in the lower tail of the within-firm wage distribution and, in particular, for workers who change their employer, pointing at involuntary (voluntary) job separations from firms that are negatively (positively) affected by the exchange rate appreciation.

[CEPR Discussion Paper 19016]


Abstract: This paper develops a dynamic spatial general equilibrium model of a multi-region multi-sector open economy in which heterogeneous agents choose optimally where to locate and work, by making forward-looking decisions under aggregate uncertainty about future realizations of economic fundamentals and idiosyncratic risk of aging. To address the role of aggregate uncertainty in interaction with spatial determinants of the equilibrium, we solve the system of individual dynamic optimal-control problems under rational expectations as a Mean Field Game, in discrete time, over the discrete state space, preserving the full non-linear structure of the problem. With a calibration for France, we demonstrate that households behave substantially differently between uncertainty and perfect foresight. By affecting the continuation value of jobs -- differently by location and age -- uncertainty alters the patterns of labor reallocation in transition as well as in the long run. The impact of uncertainty alone on individual lifetime welfare is negative on average, but it triggers heterogeneous welfare changes: substantial portions of the population lose much more than the average (are stuck in less attractive jobs) while some agents actually gain (since others did not reallocate). Consequently, the spatial distribution of economic activity deviates ceteris paribus systematically when agents make decisions under uncertainty compared to perfect foresight. In that sense, aggregate uncertainty per se shapes the spatial economy. 

Work in progress


Abstract: This paper seeks to understand novel margins of firms' growth. Stylized facts on cross-border transactions between international buyers and Swiss sellers suggest that 84% of new products are sold to only one  buyer in the year of introduction, and in half of the cases the buyer is a new buyer for the firm. We find that for small firms creation of new products or going wide contributes importantly to their total exports. For large firms, on the other hand, the majority of their export sales comes from selling old products or going deep. We put forward a theory in which firms trade-off accumulating customers for their existing products and marketing new products to new customers. Importantly, in this model innovation does not happen in a void but each new product is customized to the needs of a new buyer and subsequently can be sold to more buyers allowing the firm to increase its customer base. We use the model to derive empirical predictions that are then confirmed in the data by exploiting exogenous variation in exports stemming from the Swiss exchange rate shock in 2015.  

Abstract: We study the heterogeneous investment responses of firms that suddenly faced tougher competition due to the Swiss exchange rate shock in 2015. Firms that are more exposed to the shock substantially reduce their investments by up to 30% for at least five years. These strong investment responses are persistent over the time horizon considered implying a long run investment gap. Importantly, we demonstrate that young and innovative firms react particularly strong to that shock.

Abstract: International transactions show diverse patterns of invoicing currencies. Currency choice is an important feature of firms’ exporting decisions, in particular when they face uncertainty about future exchange rates under nominal price rigidities. Using transaction-level data on Swiss manufacturing firms, we observe that the entry mode of firms in foreign markets affects their invoicing-currency choices in those markets. To explain the observed empirical pattern, we set up a multi-country model with oligopolistic market structure, in which firms can serve foreign consumers either by exporting or by foreign investment and local supply. Our model is well equipped to accommodate the empirical finding that foreign investors more likely choose consumer-country currency for invoicing. In our model, we also show that in an environment with exchange rate uncertainty nominal price rigidities increase the attractiveness of choosing multinational production instead of exporting.