eprintid: 22338
rev_number: 17
eprint_status: archive
userid: 2744
dir: disk0/00/02/23/38
datestamp: 2016-12-14 13:22:39
lastmod: 2017-01-30 10:59:35
status_changed: 2016-12-14 13:22:39
type: workingPaper
metadata_visibility: show
creators_name: Lin, Faqin
creators_name: Hu, Cui
creators_name: Fuchs, Andreas
title: How Do Firms Respond to Political Tensions? The Heterogeneity of the Dalai Lama Effect on Trade
subjects: ddc-330
divisions: i-181000
keywords: international trade, political tensions, extensive margin, intensive margin, state-owned enterprises, firm ownership, trade intermediation, China, Tibet, Dalai Lama
abstract: Little is known about the firm-level dynamics behind trade responses to political tensions. This article reinvestigates variation in the travel pattern of the 14th Dalai Lama to study how political tensions affect trading decisions of Chinese importers. Using monthly trade data from China Customs covering imports of machinery and transport equipment from 173 countries over the 2000-2006 period, our empirical results show a significant reduction of imports in response to foreign government members’ meetings with the Dalai Lama. In line with the idea that Chinese importers face a trade-off between bearing costs from suboptimal trade transactions and costs from not accommodating the government, this ‘Dalai Lama Effect’ operates at the intensive margin, i.e., via a decrease in the import volume per importer. Examining differential effects across types of firm ownership, we find that the observed effect is driven by state-owned enterprises (and foreign-invested firms) and not by private companies. Moreover, while direct importers temporarily reduce their trade with Dalai Lama-receiving countries, there is some evidence that trade intermediaries even benefit. Overall, we
find the effects to be much more short-lived than previously thought.
date: 2016-12
id_scheme: DOI
id_number: 10.11588/heidok.00022338
schriftenreihe_cluster_id: sr-3
schriftenreihe_order: 0628
ppn_swb: 1655722549
own_urn: urn:nbn:de:bsz:16-heidok-223381
language: eng
bibsort: LINFAQINHOWDOFIRMS201612
full_text_status: public
series: Discussion Paper Series, University of Heidelberg, Department of Economics
volume: 0628
place_of_pub: Heidelberg
pages: 35
citation:   Lin, Faqin ; Hu, Cui ; Fuchs, Andreas  (2016) How Do Firms Respond to Political Tensions? The Heterogeneity of the Dalai Lama Effect on Trade.  [Working paper]     
document_url: https://archiv.ub.uni-heidelberg.de/volltextserver/22338/1/Lin_Hu_Fuchs_2016_dp628.pdf