Even though the U.S. is one of the world's leading exporters, few companies actually sell abroad. One reason may be that exporting requires a company to be highly productive.

Hernández-Murillo and Owyang (2006) showed that accounting for spatial correlations in regional data can improve forecasts of national employment. This paper considers whether the predictive advantage of disaggregate models remains when forecasting subnational data. The authors conduct horse...