To what extent has trade liberalization contributed to global production fragmentation and the formation of production networks? We derive structural equations for value added trade flows, the domestic value added content of exports (DVA) and the value added exports to exports (VAX) ratio, as...

China has defied the declining trend in domestic content in exports in many countries. We study China's rising domestic content in exports using firm and customs transaction-level data. Our approach embraces firm heterogeneity and hence reduces aggregation bias. We find that the substitution of...

We develop a conceptual framework which captures the effect of the VAT system on profit by two effective taxes. This allows (i) predictions of the determinants of voluntary registration and bunching at the registration threshold; (ii) develops a formula for estimating the elasticity of...

With the availability of international value added trade data it has become evident that gross export data and value added data do not provide the same information. Although gross exports crosses national borders and is the target of trade policy, value added data tell us what fragment in the...

Germany is the laggard of Europe, yet the country is world champion in merchandise exports. The paper tries to solve this theoretical and empirical puzzle by diagnosing a "pathological export boom" and a "bazaar effect". Excessively high wages defended by unions and the welfare state against the...