[size=13.200000762939453px]Annual Review of Economics
[size=13.200000762939453px]Vol. 6: 201-227 (Volume publication date August 2014)
[size=13.200000762939453px]Jan De Loecker1,3,4 and Pinelopi Koujianou Goldberg2,4
[size=13.200000762939453px]1Department of Economics, Princeton University, Princeton, New Jersey 08544; email: jdeloeck@princeton.edu
[size=13.200000762939453px]2Department of Economics, Yale University, New Haven, Connecticut 06520
[size=13.200000762939453px]3Centre for Economic and Policy Research, London EC1V 3PZ, United Kingdom
[size=13.200000762939453px]4National Bureau of Economic Research, Cambridge, Massachusetts 02138


[size=13.200000762939453px]In this article, we introduce an empirical framework to analyze how firm performance is affected by increased globalization. Using this framework, we discuss recent work on measuring the impact of various shocks firms face in the global marketplace, such as reductions in trade costs (through lowering tariffs and abolishing quotas). Our analytical framework nests most empirical approaches to estimating the impact of trade and industrial policies on firms active in international markets. We identify outstanding issues surrounding the identification of the underlying mechanisms and conclude with suggestions for future research.