I am professor of economics at Heinrich Heine University Düsseldorf and the Düsseldorf Institute for Competition Economics (DICE). I am also a research affiliate at CESifo.

My research focuses on international economics, trade, and trade policy. I am particularly interested in understanding firm-level heterogeneity as a driver of international trade and firm behavior in the context of international trade.

You can find my CV here.

erhardt@dice.hhu.de


Publications






Chapters in books

Working Papers

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]
Abstract: Can culture explain persistent differences in economic activity among individuals and across regions? We use a novel measure of cultural origin to identify the municipalities where the ancestors of each of today's Swiss firm founders lived in the 18th century. We then contrast the entrepreneurial activity of individuals living in the same municipality today but with cultural origins just on opposite sides of the Swiss language border. Individuals with ancestry from the German-speaking side create 20% more firms than those with ancestry from the French-speaking side. These differences persist over generations and independent of the predominant culture at the current location. Yet, the cultural origin of firm founders does not affect exit or growth of newly-founded firms. A model of entrepreneurial choice and complementary survey evidence suggest that the empirical patterns are mainly explained by differences in preferences, rather than skill. The results have sizable economic implications, accounting for 120,000 additional jobs over a period of 15 years.

[CEPR Discussion Paper 15160]


Abstract: We use firm-level data for 15 countries and 13 manufacturing sectors to estimate firm-level productivity parameters and to establish representative country-sector-specific empirical productivity distributions. We use these distributions against the backdrop of multi-sector versions of the models of Eaton and Kortum (2002) and Melitz (2003) to quantify the role of technology in shaping international trade flows. We find that, on average, absolute advantage measured as productivity differences across countries within sectors explains 15% and 21% of total variation in bilateral trade shares in the models of Eaton and Kortum (2002) and Melitz (2003), respectively. In contrast, on average, comparative advantage measured as productivity differences across sectors within countries explains 39% and 47% of variation in trade flows in these two models. We also demonstrate that empirical productivity distributions entail quantitatively important micro-to-macro implications for marginal responses of trade flows to changes in trade costs, for gravity-type estimation of trade models, and comparative statics isomorphism between the customarily parameterized models of international trade. We confirm the predictions of the two aforementioned models under empirical productivity distributions in the data.

[CEPR Discussion Paper 13602] [VOX EU Blog Post]


Abstract: Structural quantitative work in international economics typically models trade costs as a log-linear function of exogenous trade-policy variables. We propose a structural approach that allows for a non-parametric relationship and for treating tariff and non-tariff trade-policy variables as potentially endogenous. The data reject the assumption of log-linearity of trade costs in both tariff- and non-tariff-policy variables. We assess the effects of a unilateral increase of US tariffs on Chinese imports by 10 percentage points and document that the estimated effects on real bilateral trade-flow changes would be largely underestimated by standard approaches.

Work in progress

  • Egger, Peter, Katharina Erhardt, and Gerard Masllorens: Moving up or down: A model for GVC integration. [Draft upon request]


Abstract: Production processes are increasingly organized in international production networks. Firms involved in the production process can be operating at arm's length or be vertically integrated. Incidence of integration as well as direction of integration (upward or downward) depend on specific characteristics. We propose a simple model of vertical integration in a supplier-producer relationship that is rooted in the property rights theory. Generally, the direction of integration depends on the relative investment intensity of producer and supplier so as to align investment incentives and maximize joint surplus. Moreover, the organizational form depends on the market environment in the input market as well as the relative importance of the specific input for the final output. The empirical predictions are strongly confirmed in a large panel of international ownership linkages.

Abstract: We develop a dynamic general equilibrium trade model in which firms choose where to open (keep, or close) job positions, and workers choose where to locate and seeking for a job position to fill. As a result, the economy is a collection of spatially separated labor markets and both the number of jobs and their composition (by sector and occupation types) evolve over time. Households are heterogeneous in various dimensions: in the type of job that they provide labor for, and in how flexible they are when changing region, sector and job characteristics. Changing job characteristics is costly, in the same way for comparable households. We follow Caliendo et al. (2018) in modeling how households choose in which location seeking for jobs. We extend their setup to allow for households of different age, as proposed in Artuc et al. (2010). Realized shocks to fundamentals as well as changes in expectations about future shocks will affect heterogeneous agents differently, with some agents being trapped in their current location, thus being unable to adequately adapt to changes in fundamentals.
  • Egger, Peter and Katharina Erhardt: A Threshold Regression in the Presence of Sample Selection.


Abstract: Many economic problems of interest involve the simultaneous presence of unobservable and observable regimes which generate a heterogeneity about agents' behavior. Up until now, the consequences of endogenous observable and of unobservable data regimes as sources of behavioral response heterogeneity are treated distinctly in the econometrics literature. The present paper aims at filling this gap. It outlines the econometric framework for a joint treatment of threshold regression in the presence of self-selection into observable regimes. This framework is derived for cross-section as well as for panel data. We demonstrate that it works well in small to medium-sized samples by way of a Monte Carlo simulation study.

In progress
  • Raphael Auer, Egger, Peter, and Katharina Erhardt: Formation and Resolution of Supplier relationships in International Trade: Evidence from Switzerland.


In progress

In progress