Trade Shocks and Credit Reallocation (with F. Hassan and V. Rappoport)
American Economic Review, 115(4), 1142–1169, 2025.
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We identify a credit-supply contraction that arises endogenously after trade liberalization. Banks with loan portfolios concentrated in sectors exposed to competition from China face an increase in non-performing loans after China’s entry into the World Trade Organization. As a result, they reduce the supply of credit to firms, irrespective of the firm’s sector of operation. This cut in credit translates into lower employment, investment, and output.
Trade in Services Related to Intangibles and the Profit Shifting Hypothesis (with N. Accoto and G. Oddo)
Review of Income and Wealth, 70(4), 1037–1059, 2024.
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This paper focuses on the international trade in services related to intangible assets and intellectual property products (IPP), and it explores to what extent they might be used as a channel to shift the profits of multinational firms to tax havens. Using survey data on Italian firms, we first provide a geographical and sectoral analysis of Italy's trade in IPP services. We then estimate the amount of profit shifted abroad by foreign-owned firms in our sample, applying at various levels of aggregation a methodology recently put forward in the literature. Finally, we look for a correlation at the firm level between estimated shifted profits and imports of IPP services. We find that while the overall correlation is very low, there is a small cluster of firms displaying a positive correlation between these two variables.
Do Links Between Banks Matter for Bilateral Trade? (with S. Del Prete)
Review of World Economics, 156(4), 859–885, 2020.
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Do financial crises have an impact on trade flows via a shock to corporate risk or to bank risk? Focusing on Italy’s exports during a period characterized by both the global financial crisis and by the sovereign debt crisis, we exploit the prediction of standard trade models according to which financial shocks should be magnified by the time needed to ship a good to the importer’s country and by sector-level financial vulnerability. We also use bank-pair data on Italian banks’ assets and liabilities vis-à-vis their foreign bank counterparts in a specific country to construct proxies for the availability of trade finance in a given market. We find evidence of a negative impact of financial shocks on exports, especially to more distant countries and in more financially vulnerable sectors. The main channels seem to be related to an increase in corporate risk (reflecting shocks to bank finance and to buyer-supplier trade credit), while the ‘contagion effect’ of shocks stemming from bank risk seems to be much less significant.
Exporters and Importers of Services: Firm-Level Evidence on Italy (with E. Tosti)
The World Economy, 40(10), 2078–2096, 2017.
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This work contributes to the growing literature on international trade in services at firm level. Our data set provides information on exports and imports of services (excluding transportation and travel) in 2008–09 for almost 3,000 Italian industrial and services firms, divided by partner country and type of service. We report a set of stylised facts on services trade and analyse the choice between export and foreign direct investment in services at the firm level. We find that the export and import of services are highly concentrated in just a few firms. Firm-level variation in trade is positively correlated with firm size and productivity. Country-level variation is to a large extent explained by the standard gravity variables: distance strongly reduces trade in services in spite of their intangibility. Smaller and less productive firms choose to export rather than sell through foreign affiliates, although there is some heterogeneity among service types.
Industry Dynamics and Competition from Low-Wage Countries
Oxford Bulletin of Economics and Statistics, 76(3), 389–410, 2014.
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This article analyses the effect of competition from low-wage countries on domestic activity, using data on 230 Italian manufacturing sectors between 1995 and 2007. It finds that low-wage import penetration is negatively related to employment and other measures of activity. The effect is significantly smaller in more skill, capital and R&D-intensive sectors and in more vertically differentiated sectors. There is also evidence of significant effects of low-wage competition through inter-industry linkages: employment is negatively related to low-wage import penetration in downstream sectors but positively related to low-wage import penetration in upstream sectors.
Headquarter Intensity and the Choice Between Outsourcing or Integration
Industrial and Corporate Change, 21(6), 1337–1358, 2012.
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This article provides an empirical analysis of the choice between outsourcing and integration, with a distinction based on whether production is carried out at home or abroad. Using firm-level data for Italy, we find that the preference for integration over outsourcing is positively related to indicators of headquarter intensity, notably capital intensity, and to firm-level productivity. We also find that foreign sourcing strategies are not independent from domestic sourcing strategies. Overall, the evidence provides support to models based on relationship-specific investments.
Working Papers
- Export shocks and banks' domestic credit: balancing liquidity provision and risk mitigation (with G. Marinelli and F. Palazzo)
- Stranded in the ICE: Banks and the transition to electric vehicles (with A. Fabiani)
- Reshaping trade after Brexit: Firms’ adjustment to uncertainty and non-tariff barriers (with S. Giglioli)
