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Imports, Productivity And Substitutability Between Intermediate Inputs: A Quantile Regressions Approach

Abstract:

Using firm-level data from Ecuador, we study the impact of imported intermediates on productivity and estimate the elasticity of substitution between domestic and imported intermediates. We contribute to the literature by complementing mean regression results with quantile regression results. Our results suggest that, first, there is a positive effect of imports on productivity; second, this effect is significant at all quantile levels of output, although this effect seems to have an inverted-U shape; and third, domestic and imported intermediates are substitutes.