"Effects of Terms of Trade Gains and Tariff Changes on the U.S. Standard of Living and Productivity Measurement," with Robert C. Feenstra, and Marshall B. Reinsdorf, 2007.

In this paper, we explain the theoretical framework for analyzing the effect of export and import prices on real income growth and on productivity measurement, and we extend this framework to analyze the effects of tariff changes. Applying this theory to the data confirms that trade prices have contributed significantly to rising standards of living and that trade liberalization is an important part of this story. Furthermore, favorable changes in trade prices and trade liberalization can raise nominal GDP in a way that is difficult to distinguish from effects of productivity gains. Indeed, we find that uncounted gains from improving terms of trade and from trade liberalization made the much-discussed post-1995 productivity speed-up seem larger than it really was.

"Globalization, Multinationals, and the Elasticity of Labor Demand," with Jonathan E. Haskel, 2007.

One of the most widely discussed impacts of globalization on domestic economies is to raise the elasticity of demand for labor-especially for multinational firms at the heart of globalization. To examine this idea empirically, on a panel of U.K. manufacturing plants spanning the 1980s and 1990s we estimate internal and external margins of labour demand. Because the 1990s featured the global shock of the fall of communism in Eastern Europe and the rise of China and India, these data are particularly well suited. We have two main findings: one on the internal margin of labor demand at ongoing plants, and the other on the external margin of plant shutdowns. First, multinational firms have more-elastic labor demand than do purely domestic firms-a gap that grew over the 1990s. Second, before 1990 multinational plant were less likely to close-but after 1990 they were more likely to close. Together, our results indicate important labor-demand differences between multinational and domestic firms-differences that recent global changes have accentuated.

"Productivity Growth, Knowledge Flows, and Spillovers," with Gustavo Crespi, Chiara Criscuolo, and Jonathan E. Haskel, 2007.

This paper explores the role of knowledge flows and productivity growth by linking direct survey data on knowledge flows to firm-level data on TFP growth. Our unique data measure the information flows often considered important, especially by policy-makers: such as from within the firm; from suppliers, customers, and competitors, and from "nearby" (in a geographical or technological sense) multinational firms. We examine (a) what are the empirically important sources of knowledge flows? (b) to what extent do such flows contribute to productivity growth? (c) do such flows constitute a spillover of free knowledge? (d) how do such flows correspond to suggested sources, such as multinational or R&D presence? We find that: (a) the main sources of knowledge are competitors; suppliers; and plants that belong to the same business group ; (b) these three flows together account for about 50% of TFP growth; (c) the main "free" information flow spillover is from competitors; and (d) multinational presence contributes to this spillover.

"Global Engagement and the Innovation Activities of Firms," with Chiara Criscuolo and Jonathan E. Haskel, NBER Working Paper #11479, 2005.

Firms that export or, even more so, are part of a multinational enterprise tend to exhibit higher productivity than their purely domestic counterparts. To better understand this correlation, we incorporate the perspective of industrial organization that one of the main drivers of differences in productivity is differences in knowledge. We examine a new data set of several thousand U.K. enterprises covering all industries from 1994 through 2000. For each enterprise we have multiple detailed measures of knowledge outputs, knowledge investments, and sources of existing knowledge. We find that globally engaged firms do innovate more. But this is not just because globally engaged firms use more researchers. It is also because they learn more from more sources such as suppliers and customers, universities, and their intra-firm worldwide pool of information. We also find that the relative importance of knowledge sources varies systematically with the type of innovation.