Skip to main content

Daniel Yi Xu

Professor of Economics
Economics
Box 90097, Durham, NC 27708
220 Social Sciences Bldg, Box 90097, Durham, NC 27708

Selected Publications


How Costly Are Markups?

Journal Article Journal of Political Economy · July 1, 2023 We study the welfare costs of markups in a dynamic model with hetero- geneous firms and endogenous markups. We provide aggregation re- sults summarizing the macro implications of micro-level markup het- erogeneity. We calibrate our model to US Census of Ma ... Full text Cite

Tax Policy and Lumpy Investment Behaviour: Evidence from China’s VAT Reform

Journal Article Review of Economic Studies · March 1, 2023 We incorporate the lumpy nature of firm-level investment into the study of how tax policy affects investment behaviour. We show that tax policies can directly impact the lumpiness of investment. Extensive-margin responses to tax policy are key to understan ... Full text Cite

O-Ring Production Networks

Journal Article · February 2021 Cite

The structure of business taxation in China

Journal Article · January 1, 2021 This paper documents facts about the structure of business taxation in China using administrative tax data from 2007 to 2011 from the State Taxation Administration.We first document the importance of different business taxes across industries. Although cor ... Full text Cite

Understanding the social learning effect in contagious switching behavior

Journal Article Management Science · October 1, 2019 We study the contagious switching behavior related to a consumer’s choice of wireless carriers, that is, that a consumer is more likely to switch wireless carriers if more of their contacts from the same carrier have switched. Contagious switching (or a po ... Full text Open Access Cite

The role of firm factors in demand, cost, and export market selection for chinese footwear producers

Journal Article Review of Economic Studies · October 1, 2018 In this article, we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002 to 2006 to estimate an empirical model of export demand, pricing, and market participation by destination m ... Full text Cite

Comments on “Innovation and product reallocation in the great recession”

Journal Article Journal of Monetary Economics · January 1, 2018 Full text Cite

Trade, quality upgrading, and input linkages: Theory and evidence from Colombia

Journal Article American Economic Review · January 1, 2018 A quantitative model brings together theories linking international trade to quality, technology, and demand for skills. Standard effects of trade on importers and exporters are magnifed through domestic input linkages. We estimate the model with data from ... Full text Cite

Two-sided Search in International Markets

Scholarly Edition · 2016 We develop a dynamic model of the many-to-many matching processes through which international business relationships are formed. Our formulation characterizes exporters' and importers' search efforts as functions of their type, their current portfolio of b ... Cite

Competition, markups, and the gains from international trade

Journal Article American Economic Review · October 1, 2015 We study the procompetitive gains from international trade in a quantitative model with endogenously variable markups. We find that trade can significantly reduce markup distortions if two conditions are satisfied: (i ) there is extensive misallocation, an ... Full text Cite

(Indirect) input linkages

Journal Article American Economic Review · May 1, 2015 Full text Cite

Finance and misallocation: Evidence from plant-level data

Journal Article American Economic Review · February 1, 2014 We use producer-level data to evaluate the role of financial frictions in determining total factor productivity (TFP). We study a model of establishment dynamics in which financial frictions reduce TFP through two channels. First, finance frictions distort ... Full text Cite

Entry, exit, and the determinants of market structure

Journal Article RAND Journal of Economics · September 1, 2013 This article estimates a dynamic, structural model of entry and exit for two US service industries: dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competit ... Full text Cite

R&D investment, exporting, and productivity dynamics

Journal Article American Economic Review · June 1, 2011 This paper estimates a dynamic structural model of a producer's decision to invest in R&D and export, allowing both choices to endogenously affect the future path of productivity. Using plant-level data for the Taiwanese electronics industry, both activiti ... Full text Cite

Entrepreneurship and the extensive margin in export growth: A microeconomic accounting of Costa Rica's export growth during 1997-2007

Journal Article World Bank Economic Review · January 1, 2011 Successful exporting countries are often seen as successful economies. This paper studies the role of new exporting entrepreneurs-defined as firms that became exporters-in determining export growth in a fast growing and export oriented middleincome country ... Full text Cite

Macroeconomic implications of size-dependent policies

Journal Article Review of Economic Dynamics · October 1, 2008 Government policies that impose restrictions on the size of large establishments or firms, or promote small ones, are widespread across countries. In this paper, we develop a framework to systematically study policies of this class. We study a simple growt ... Full text Cite

R&D investments, exporting, and the evolution of firm productivity

Journal Article American Economic Review · May 1, 2008 Full text Cite

How costly are restrictions on size?

Journal Article Japan and the World Economy · August 1, 2006 We develop a simple framework to address government policies that restrict the size of establishments in a particular sector. The economy we study is a two-sector extension of the span-of-control model of Lucas [Lucas, R.E., 1978. On the size distribution ... Full text Cite

How Costly Are Markups?

Journal Article Journal of Political Economy · July 1, 2023 We study the welfare costs of markups in a dynamic model with hetero- geneous firms and endogenous markups. We provide aggregation re- sults summarizing the macro implications of micro-level markup het- erogeneity. We calibrate our model to US Census of Ma ... Full text Cite

Tax Policy and Lumpy Investment Behaviour: Evidence from China’s VAT Reform

Journal Article Review of Economic Studies · March 1, 2023 We incorporate the lumpy nature of firm-level investment into the study of how tax policy affects investment behaviour. We show that tax policies can directly impact the lumpiness of investment. Extensive-margin responses to tax policy are key to understan ... Full text Cite

O-Ring Production Networks

Journal Article · February 2021 Cite

The structure of business taxation in China

Journal Article · January 1, 2021 This paper documents facts about the structure of business taxation in China using administrative tax data from 2007 to 2011 from the State Taxation Administration.We first document the importance of different business taxes across industries. Although cor ... Full text Cite

Understanding the social learning effect in contagious switching behavior

Journal Article Management Science · October 1, 2019 We study the contagious switching behavior related to a consumer’s choice of wireless carriers, that is, that a consumer is more likely to switch wireless carriers if more of their contacts from the same carrier have switched. Contagious switching (or a po ... Full text Open Access Cite

The role of firm factors in demand, cost, and export market selection for chinese footwear producers

Journal Article Review of Economic Studies · October 1, 2018 In this article, we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002 to 2006 to estimate an empirical model of export demand, pricing, and market participation by destination m ... Full text Cite

Comments on “Innovation and product reallocation in the great recession”

Journal Article Journal of Monetary Economics · January 1, 2018 Full text Cite

Trade, quality upgrading, and input linkages: Theory and evidence from Colombia

Journal Article American Economic Review · January 1, 2018 A quantitative model brings together theories linking international trade to quality, technology, and demand for skills. Standard effects of trade on importers and exporters are magnifed through domestic input linkages. We estimate the model with data from ... Full text Cite

Two-sided Search in International Markets

Scholarly Edition · 2016 We develop a dynamic model of the many-to-many matching processes through which international business relationships are formed. Our formulation characterizes exporters' and importers' search efforts as functions of their type, their current portfolio of b ... Cite

Competition, markups, and the gains from international trade

Journal Article American Economic Review · October 1, 2015 We study the procompetitive gains from international trade in a quantitative model with endogenously variable markups. We find that trade can significantly reduce markup distortions if two conditions are satisfied: (i ) there is extensive misallocation, an ... Full text Cite

(Indirect) input linkages

Journal Article American Economic Review · May 1, 2015 Full text Cite

Finance and misallocation: Evidence from plant-level data

Journal Article American Economic Review · February 1, 2014 We use producer-level data to evaluate the role of financial frictions in determining total factor productivity (TFP). We study a model of establishment dynamics in which financial frictions reduce TFP through two channels. First, finance frictions distort ... Full text Cite

Entry, exit, and the determinants of market structure

Journal Article RAND Journal of Economics · September 1, 2013 This article estimates a dynamic, structural model of entry and exit for two US service industries: dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competit ... Full text Cite

R&D investment, exporting, and productivity dynamics

Journal Article American Economic Review · June 1, 2011 This paper estimates a dynamic structural model of a producer's decision to invest in R&D and export, allowing both choices to endogenously affect the future path of productivity. Using plant-level data for the Taiwanese electronics industry, both activiti ... Full text Cite

Entrepreneurship and the extensive margin in export growth: A microeconomic accounting of Costa Rica's export growth during 1997-2007

Journal Article World Bank Economic Review · January 1, 2011 Successful exporting countries are often seen as successful economies. This paper studies the role of new exporting entrepreneurs-defined as firms that became exporters-in determining export growth in a fast growing and export oriented middleincome country ... Full text Cite

Macroeconomic implications of size-dependent policies

Journal Article Review of Economic Dynamics · October 1, 2008 Government policies that impose restrictions on the size of large establishments or firms, or promote small ones, are widespread across countries. In this paper, we develop a framework to systematically study policies of this class. We study a simple growt ... Full text Cite

R&D investments, exporting, and the evolution of firm productivity

Journal Article American Economic Review · May 1, 2008 Full text Cite

How costly are restrictions on size?

Journal Article Japan and the World Economy · August 1, 2006 We develop a simple framework to address government policies that restrict the size of establishments in a particular sector. The economy we study is a two-sector extension of the span-of-control model of Lucas [Lucas, R.E., 1978. On the size distribution ... Full text Cite

Notching R&D Investment with Corporate Income Tax Cuts in China

Journal Article We analyze the effects of a large fiscal incentive for R&D investment in China that awards a lower average corporate income tax rate to qualifying firms. The sharp incentives of the program generate notches, or jumps, in firm values, and vary over time and ... Open Access Link to item Cite