Katharina Erhardt

I am a Professor of Economics at 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

Photo Credits: Susanne Schmidt-Dominé

Publications

Egger, Peter and Katharina Erhardt (2024): Heterogeneous Effects of Tariff and Nontariff Trade-Policy Barriers in Quantitative General Equilibrium. Quantitative Economics, 15: 453-487.

Egger, Peter, Katharina Erhardt, and Gerard Masllorens (2023): Backward versus Forward Integration of Firms in Global Value Chains. European Economic Review (153).

Erhardt, Katharina and Simon Haenni (2022): The Cultural Roots of Firm Entry, Exit, and Growth. The Economic Journal 132 (686), pp. 2767–2814.

[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]

Egger, Peter, Katharina Erhardt and Christian Keuschnigg (2020): Heterogeneous Tax Sensitivity of Firm-level Investments, Journal of Economic Behavior and Organization (176), pp. 512-538.

Raphael Auer, Ariel Burstein, Katharina Erhardt and Sarah Lein (2019): Exports and Invoicing: Evidence from the 2015 Swiss Franc Appreciation, American Economic Review Papers & Proceedings (109), pp. 533-538.

Egger, Peter, Katharina Erhardt and Andrea Lassmann (2019): Immigration and Firms' Integration in International Production Networks, European Economic Review (111), pp. 1-34.

Erhardt, Katharina (2017): On Home Market Effects and Firm Heterogeneity, European Economic Review (98), pp. 316-340.

Egger, Peter, Katharina Erhardt and Andrea Lassmann (2015): Productivity and R&D as Drivers of Exports and Domestic Sales - Semi-parametric Evidence from French Firm-level Data, World Economy 38 (7), pp. 1115-1129.

Working Papers

Arni, Patrick, Peter Egger, Katharina Erhardt, Matthias Gubler, and Philip Sauré: Heterogeneous Impacts of Trade Shocks on Workers. (Revise and Resubmit at the Review of Economics and Statistics)

[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.

Erhardt, Katharina and Apoorva Gupta: Go wide or go deep: Margins of new trade flows. (Revise and Resubmit at AEJ:Micro)

[CESifo Working Paper 11269][DICE Discussion Paper 415]

Abstract: This paper aims to understand the pathways by which exporters become entities that sell multiple goods to multiple customers. To understand firms' export strategies, we analyse new trade flows -- new seller-buyer-product combinations -- of individual exporters. Our first finding highlights that these new trade flows are an important margin for firms of all size classes, accounting for approximately 62% of their overall trade flows. Classifying new trade flows into going-wide (introducing new products) and going-deep (reaching new buyers for existing products), we find that the dominant margin of export expansion depends on the size and life-cycle stage of exporters; smaller firms rely relatively more on going-wide and large firms more on going-deep. We also demonstrate that selling new products is different from selling existing products: Firms target new products to a single, often new, buyer. To rationalize these facts, we propose a conceptual framework where firms allocate scarce sales personnel between selling existing products to more buyers and matching with new buyers for introducing new products. We empirically test and confirm the model's key predictions. In particular, we use the 2015 Swiss exchange rate shock and show that going-deep is more pronounced as an export strategy when a firm's effective market size is relatively larger. The findings suggest varying scope and size for firms born in different phases of globalisation.

Egger, Peter, Katharina Erhardt, and Sergey Nigai: Empirical Productivity Distributions and International Trade.

[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.

Egger, Peter, Katharina Erhardt, and Davide Suverato: How Aggregate Uncertainty Shapes the Spatial Economy.

[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

Dibiasi, Andreas and Katharina Erhardt: Firm-level Investment Responses to Increased Competition

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.

Egger, Hartmut, Peter Egger, Katharina Erhardt, and Leandro Navarro: Exchange rate pass-through and the mode of foreign market entry

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.

Chapters in books

Erhardt, Katharina and Andrea Lassmann (2023): Immigration and international trade in Oxford Research Encyclopedia of Economics and Finance
Baltagi, Badi, Peter Egger and Katharina Erhardt: The Estimation of Gravity Models in International Trade in The Econometrics of Multi-dimensional Panels - Theory and Applications edited by Laszlo Matyas, Springer, 2017.

Publications in non-peer-reviewed journals

Egger, Peter and Katharina Erhardt (2016): EU-Swiss Trade Integration via Input-Output Linkages, Aussenwirtschaft, 67 (03), pp. 1-23.

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