Granular Comparative Advantage
|
|
- Calvin Phillips
- 6 years ago
- Views:
Transcription
1 Granular Comparative Advantage Cecile Gaubert Oleg Itskhoki Stanford University March / 26
2 Exports are Granular Freund and Pierola (2015): Export Superstars Across 32 developing countries, the largest exporting firm accounts on average for 17% of total manufacturing exports Our focus: French manufacturing Average export share of the largest firm Manufacturing 1 industry 7% 2-digit 23 sectors 18% 3-digit 117 sectors 26% 4-digit 316 sectors 37% 1 / 26
3 Firm-size distribution is: 1 fat-tailed (Zipf s law) 2 discrete } = Granularity Granularity Canonical example: power law (Pareto) with shape θ < 2 Intuitions from Gaussian world fail, even for very large N a single draw can shape N i=1 X illustration i average can differ from expectation (failure of LLN) 2 / 26
4 Firm-size distribution is: 1 fat-tailed (Zipf s law) 2 discrete } = Granularity Granularity Canonical example: power law (Pareto) with shape θ < 2 Intuitions from Gaussian world fail, even for very large N a single draw can shape N i=1 X illustration i average can differ from expectation (failure of LLN) Most common application: aggregate fluctuations Gabaix (2011), di Giovanni and Levchenko (2012) The role of granularity for comparative advantage of countries is a natural question, yet has not been explored Can a few firms shape country-sector specialization? 2 / 26
5 Trade Models Trade models acknowledge fat-tailed-ness but not discreteness emphasis on firms, but each firm is infinitesimal (LLN applies) hence, no role of individual firms in shaping sectoral aggregates Exceptions with discrete number of firms 1 One-sector model of Eaton, Kortum and Sotelo (EKS, 2012) 2 Literature on competition/markups (e.g., AB 2008, EMX 2014, AIK 2014, Neary 2015) 3 / 26
6 Trade Models Trade models acknowledge fat-tailed-ness but not discreteness emphasis on firms, but each firm is infinitesimal (LLN applies) hence, no role of individual firms in shaping sectoral aggregates Exceptions with discrete number of firms 1 One-sector model of Eaton, Kortum and Sotelo (EKS, 2012) 2 Literature on competition/markups (e.g., AB 2008, EMX 2014, AIK 2014, Neary 2015) Our focus: can granularity explain sectoral trade patterns? 1 sector-level comparative advantage (like DFS) 2 firm heterogeneity within sectors (like Melitz) 3 granularity within sectors (like EKS) relax the LLN assumption in a multi-sector Melitz model take seriously that a typical French sector has 350 firms with the largest firm commanding a 20% market share 3 / 26
7 Granularity Our approach percentiles draws 0 T(z) Productivity draws, ϕ 4 / 26
8 Granularity Our approach percentiles draws 0 T(z) Productivity draws, ϕ Fundamental vs Granular 4 / 26
9 Granularity Our approach percentiles draws 0 T(z) Productivity draws, ϕ Fundamental vs Granular: Why do we care? 4 / 26
10 Roadmap: This paper 1 Basic framework with granular comparative advantage 2 GE Estimation Procedure SMM using French firm-level data 3 Explore implications of the estimated granular model many continuous-world intuitions fail dynamic counterfactuals 5 / 26
11 Roadmap: This paper 1 Basic framework with granular comparative advantage 2 GE Estimation Procedure SMM using French firm-level data 3 Explore implications of the estimated granular model many continuous-world intuitions fail dynamic counterfactuals Highlights of the results from the estimated model: 1 A parsimonious granular model fits many empirical patterns 2 Granularity accounts for 20% of variation in export shares most export-intensive sectors tend to be granular 3 Moments of firm-size distribution explain trade patterns 4 Granularity can explain much of the mean reversion in CA more granular sectors are more volatile death of a single firm can alter considerably the CA 5 / 26
12 Modeling Framework 6 / 26
13 Model Structure 1 Two countries: Home and Foreign inelastically-supplied labor L and L 2 Continuum of sectors z [0, 1]: { 1 } Q = exp α z log Q z dz 0 3 Sectors vary in comparative advantage: T z /T z N (µ T, σ T ) 6 / 26
14 1 Two countries: Home and Foreign inelastically-supplied labor L and L Model Structure 2 Continuum of sectors z [0, 1]: { 1 } Q = exp α z log Q z dz 0 3 Sectors vary in comparative advantage: T z /T z N (µ T, σ T ) 4 Within a sector, a finite number of firms (varieties) K z : Q z = [ Kz i=1 q σ 1 σ z,i ] σ σ 1 5 Each sector has an EKS market structure 6 / 26
15 Productivity draws in a given sector z: Number of (shadow) entrants: Poisson ( M z ) Entrants productivity draws: Pareto ( θ; ϕ z ) EKS Sectors Denote N ϕ number of firms with productivity ϕ N ϕ Poisson ( T z ϕ θ), T z M z ϕ θ z with T z /T z shaping sector-level CA 7 / 26
16 Productivity draws in a given sector z: Number of (shadow) entrants: Poisson ( M z ) Entrants productivity draws: Pareto ( θ; ϕ z ) EKS Sectors Denote N ϕ number of firms with productivity ϕ N ϕ Poisson ( T z ϕ θ), T z M z ϕ θ z with T z /T z shaping sector-level CA Marginal cost: c = w/ϕ at home and τw/ϕ abroad Fixed cost of production and exports: F in local labor 7 / 26
17 Productivity draws in a given sector z: Number of (shadow) entrants: Poisson ( M z ) Entrants productivity draws: Pareto ( θ; ϕ z ) EKS Sectors Denote N ϕ number of firms with productivity ϕ N ϕ Poisson ( T z ϕ θ), T z M z ϕ θ z with T z /T z shaping sector-level CA Marginal cost: c = w/ϕ at home and τw/ϕ abroad Fixed cost of production and exports: F in local labor Oligopolistic (Bertrand) competition and variable markups Atkeson-Burstein (2008): {c i } {s i, µ i, p i } Kz i=1 show 7 / 26
18 Market Entry and GE Assumption: sequential entry in increasing order of unit cost [ w/ϕ c 1 < c 2 <... < c K <..., where c i = i, if Home, τw /ϕ i, if Foreign unique equilibrium Profits: Π i = s i ε(s i ) α zy wf 8 / 26
19 Market Entry and GE Assumption: sequential entry in increasing order of unit cost [ w/ϕ c 1 < c 2 <... < c K <..., where c i = i, if Home, τw /ϕ i, if Foreign unique equilibrium Profits: Π i = s i ε(s i ) α zy wf Entry: Π K K 0 and ΠK+1 K+1 < 0 determines K z 8 / 26
20 Market Entry and GE Assumption: sequential entry in increasing order of unit cost [ w/ϕ c 1 < c 2 <... < c K <..., where c i = i, if Home, τw /ϕ i, if Foreign unique equilibrium Profits: Π i = s i ε(s i ) α zy wf Entry: Π K K 0 and ΠK+1 K+1 < 0 determines K z General equilibrium: GE vector X = (Y, Y, w, w ) Within-sector allocations Z = { } K z, {s z,i } Kz i=1 z [0,1] Labor market clearing and trade balance (linear in X) Fast iterative algorithm 8 / 26
21 Foreign share: Properties of the Granular Model Λ z X z α z Y = K z i=1 (1 ι z,i)s z,i Expected foreign share: { } T Φ z = E Λ z z T = z Granular residual: (τω) θ Tz T z Γ z Λ z Φ z : E T {Γ z } = E T {Λ z Φ z } = 0 Aggregate exports: X = Y 1 0 α z Λ z dz = ΦY, Φ 1 0 α z Φ z dz 9 / 26
22 Estimation and Model Fit 10 / 26
23 Estimation procedure Data: French firm-level data (BRN) and Trade data Firm-level domestic sales and export sales Aggregate import data (Comtrade) digit manufacturing sectors Parametrize sector-level comparative advantage: T (z)/t (z) log N (µ T, σ T ) Based on empirical distribution shown in Hanson et al. (2015) Stage 1: calibrate Cobb-Douglas shares {α z } and w/w CD shares read from domestic sales + imports, by sector w/w = 1.13, trade-weighted wage of France s trade partners Normalizations: w = 1 and L = 100 Stage 2: SMM procedure to estimate {σ, θ, τ, F, µ T, σ T }, while (Y, Y, L /L) are pinned down by GE 10 / 26
24 Estimated Parameters Parameter Estimate Std. error Auxiliary variables σ 5 κ = θ θ σ τ w/w F ( 10 5 ) L /L µ T Y /Y σ T Π/Y / 26
25 Moment Fit Moments Data, ˆm Model, M( ˆΘ) Loss (%) 1. Log number of firms, mean log M st. dev. z Top-firm market share, mean s 4. st. dev. z, Top-3 market share, mean 3 j=1 s z,j 6. st. dev Imports/dom. sales, mean Λ z st. dev Exports/dom. sales, mean Λ st. dev. z Fraction of sectors with { } 11. P Xz > exports>dom. sales Ỹz X z Regression coefficients 12. export share on top-firm share ˆb (0.156) (0.104) 13. export share on top-3 share ˆb (0.108) (0.090) 14. import share on top-firm share ˆb (0.097) (0.079) 15. export share on top-3 share ˆb (0.074) (0.069) 12 / 26
26 (a) Number of French firms (b) Top market share 0.3 Data Model (c) Domestic import share (d) Pareto shape of sales / 26
27 Non-targeted Moments Correlation between top market share and number of firms: s z,1 = const + γ M log M z + γ Y log Ỹ z + ɛ s z Data: (0.008) (0.008) Model: (0.007) (0.006) Extensive margin of sales: log M z = c d + χ d Data: (0.082) Model: (0.011) log(ỹ z X z ) + ɛ d z 14 / 26
28 Equilibrium markups Other Top 4 Top 3 Top 2 Top firm 15 / 26
29 Quantifying Granular Trade 16 / 26
30 Decomposition of Trade Fflows Variance decomposition of X z = Λ zα z Y with Λ z = Φ z + Γ z: var(λ z) = var(φ z) + var(γ z), var(log X z ) var(log α z ) + var(log Λ z) Table: Variance decomposition of trade flows Granular contribution Export share contribution Common θ Sector-specific θ z (1) (2) (3) (4) (5) var(γ z ) var(λ z ) 17.0% 22.3% 26.0% 28.4% 20.3% var(log Λ z ) var(log X z ) 57.2% 59.2% 62.5% 63.9% 59.0% Pareto shape parameter κ z = θz σ Estimated Pareto shape ˆκ z Top-firm market share s z, / 26
31 Export Intensity and Granularity Granularity does not create additional trade on average Yet, granularity creates skewness across sectors in exports most export-intensive sectors are likely of granular origin (a) Fraction of granular sectors 1/4 Granular 1/3 Granular 1/2 Granular (b) Granular contribution to trade 0.3 Export share Granular exports Deciles of sectors, by export intensity Λ z Deciles of sectors, by export intensity Λ z 17 / 26
32 Export Intensity and Granularity Granularity does not create additional trade on average Yet, granularity creates skewness across sectors in exports most export-intensive sectors are likely of granular origin (a) Distribution of Λ z Φ z (b) Distribution of Φ z Λ z 1 p50 p75 p90 p95 p99 1 p50 p75 p90 p95 p / 26
33 Properties of Granular Exports Γ z = Λ z Φ z are orthogonal with Φ z, log(α z Y ) and log M z Best predictor of Γ z is s z,1, the relative size of the largest firm Table: Projections of granular exports Γ z (1) (2) (3) (4) (5) (6) s z, s z, log M z log(α z Y ) Φ z R / 26
34 Identifying Granular Sectors Which sectors are granular? Neither Φ z, nor Γ z are observable P{Γ z ϑλ z Λ Λ z, r z } = z Φ ϑλ g( Φ z, Λ ) z, r z dφ z z 1 0 g( ), Φ z, Λ z, r z dφ z Top home-firm market share, s z,(1) Export share, Λ (z) 0 19 / 26
35 Dynamics of Comparative Advantage 20 / 26
36 Dynamic Model Use the granular model with firm dynamics to study the implied time-series properties of aggregate trade Shadow pull of firms in each sector with productivities {ϕ it } Productivity of the firms follows a random growth process: log ϕ it = µ + log ϕ i,t 1 + νε it, ε it iidn (0, 1) with reflection from the lower bound ϕ and µ= θν 2 /2 Each period: static entry game and price setting equilibrium Calibrate idiosyncratic firm dynamics (volatility of shocks ν) using the dynamic properties of market shares No aggregate shocks 20 / 26
37 Firm Dynamics and CA Empirical evidence in Hanson, Lind and Muendler (2015): 1 Hyperspecialization of exports 2 High Turnover of export-intensive sectors Moment Data HLM France Model SR persistence std( s z,i,t+1 ) LR persistence corr( s z,i,t+10, s z,i,t ) Top-1% sectors export share 21% 17% 18% Top-3% sectors export share 43% 30% 33% Turnover: remain in top-5% after 20 years 52% 71% Idiosyncratic firm productivity dynamics explains the majority of turnover of top exporting sectors over time 21 / 26
38 Mean Reversion in CA Idiosyncratic firm dynamics in a granular model predicts mean reversion in comparative advantage In addition, granular sectors are more volatile (a) Mean reversion in Λ z (b) Volatility of Λ z Expected change in export share, Λ z years 20 years Variation in export share, std( Λ z) Deciles of sectors, by granular Γ z Deciles of sectors, by granular Γ z 22 / 26
39 Death of a Large Firm Death (sequence of negative productivity shocks) of a single firm can substantially affect sectoral comparative advantage In the most granular sectors, death of a single firm can push the sector from top-5% of CA into comparative disadvantage / 26
40 Granularity and reallocation Sectoral labor allocation: L z L α z + θ NX z σκ 1 Y Interaction between trade openness and granularity results in sectoral reallocation and aggregate volatility 24 / 26
41 Policy Counterfactuals 25 / 26
42 1 Merger analysis Policy counterfactuals 2 Misallocation and trade policy policies that hinder growth of granular firms why trade barriers often target individual foreign firm? 25 / 26
43 1 Merger analysis Policy counterfactuals 2 Misallocation and trade policy policies that hinder growth of granular firms why trade barriers often target individual foreign firm? Figure: Welfare effects of Merger / 26
44 Conclusion 26 / 26
45 Conclusion The world is granular! (at least, at the sectoral level) We better develop tools and intuitions to deal with it Applications: 1 Innovation, growth and development 2 Misallocation 3 Industrial policy 4 Cities and agglomeration 26 / 26
46 APPENDIX 27 / 26
47 Granularity Illustration The role of top draw, as the number of draws N increases ( corr max i X i, ) X i i max i X i i X i Number of draws Number of draws back to slides 28 / 26
48 Sectoral equilibrium Sectoral equilibrium system: p i = µ i c i, µ i = ε i ε i 1 where ε i = σ(1 s i ) + s i, s i = ( pi ) ( 1 σ K ) 1/(1 σ) where P = P i=1 p1 σ i. back to slides 29 / 26
Granular Comparative Advantage
Granular Comparative Advantage Cecile Gaubert cecile.gaubert@berkeley.edu Oleg Itskhoki itskhoki@princeton.edu RASA IX International Conference Washington DC November 218 1 / 28 Exports are Granular Freund
More informationMelitz, M. J. & G. I. P. Ottaviano. Peter Eppinger. July 22, 2011
Melitz, M. J. & G. I. P. Ottaviano University of Munich July 22, 2011 & 1 / 20 & & 2 / 20 My Bachelor Thesis: Ottaviano et al. (2009) apply the model to study gains from the euro & 3 / 20 Melitz and Ottaviano
More informationCEMMAP Masterclass: Empirical Models of Comparative Advantage and the Gains from Trade 1 Lecture 3: Gravity Models
CEMMAP Masterclass: Empirical Models of Comparative Advantage and the Gains from Trade 1 Lecture 3: Gravity Models Dave Donaldson (MIT) CEMMAP MC July 2018 1 All material based on earlier courses taught
More informationMelitz, M. J. & G. I. P. Ottaviano. Peter Eppinger. July 22, 2011
Melitz, M. J. & G. I. P. Ottaviano University of Munich July 22, 2011 & 1 / 20 & & 2 / 20 My Bachelor Thesis: Ottaviano et al. (2009) apply the model to study gains from the euro & 3 / 20 Melitz and Ottaviano
More informationComparative Advantage and Heterogeneous Firms
Comparative Advantage and Heterogeneous Firms Andrew Bernard, Tuck and NBER Stephen e Redding, LSE and CEPR Peter Schott, Yale and NBER 1 Introduction How do economies respond when opening to trade? Classical
More informationEaton Kortum Model (2002)
Eaton Kortum Model (2002) Seyed Ali Madanizadeh Sharif U. of Tech. November 20, 2015 Seyed Ali Madanizadeh (Sharif U. of Tech.) Eaton Kortum Model (2002) November 20, 2015 1 / 41 Introduction Eaton and
More informationMeasuring the Gains from Trade: They are Large!
Measuring the Gains from Trade: They are Large! Andrés Rodríguez-Clare (UC Berkeley and NBER) May 12, 2012 Ultimate Goal Quantify effects of trade policy changes Instrumental Question How large are GT?
More informationMIT PhD International Trade Lecture 15: Gravity Models (Theory)
14.581 MIT PhD International Trade Lecture 15: Gravity Models (Theory) Dave Donaldson Spring 2011 Introduction to Gravity Models Recall that in this course we have so far seen a wide range of trade models:
More informationInternational Prices and Exchange Rates Econ 2530b, Gita Gopinath
International Prices and Exchange Rates Econ 2530b, Gita Gopinath Model variable mark-ups CES demand: Constant mark-ups: ( ) εin µ in = log ε in 1 Given that markups are constant, Γ in = 0. ( ) θ = log.
More informationDynamics of Firms and Trade in General Equilibrium. Robert Dekle, Hyeok Jeong and Nobuhiro Kiyotaki USC, Seoul National University and Princeton
Dynamics of Firms and Trade in General Equilibrium Robert Dekle, Hyeok Jeong and Nobuhiro Kiyotaki USC, Seoul National University and Princeton Figure a. Aggregate exchange rate disconnect (levels) 28.5
More informationCross-Country Differences in Productivity: The Role of Allocation and Selection
Cross-Country Differences in Productivity: The Role of Allocation and Selection Eric Bartelsman, John Haltiwanger & Stefano Scarpetta American Economic Review (2013) Presented by Beatriz González January
More informationInternational Trade Lecture 16: Gravity Models (Theory)
14.581 International Trade Lecture 16: Gravity Models (Theory) 14.581 Week 9 Spring 2013 14.581 (Week 9) Gravity Models (Theory) Spring 2013 1 / 44 Today s Plan 1 The Simplest Gravity Model: Armington
More informationInternational Trade. Lecture 4: the extensive margin of trade. Thomas Chaney. Sciences Po. Thomas Chaney (Sciences Po) International Trade 1 / 17
International Trade ecture 4: the extensive margin of trade Thomas Chaney Sciences Po Thomas Chaney (Sciences Po) International Trade / 7 Target of the paper Explain the observed role of the extensive
More informationGlobal Production with Export Platforms
Discussion of Global Production with Export Platforms by Felix Tintelnot Oleg Itskhoki Princeton University NBER ITI Summer Institute Boston, July 2013 1 / 6 Introduction Question: Where should firms locate
More informationTrade and Inequality: From Theory to Estimation
Trade and Inequality: From Theory to Estimation Elhanan Helpman Oleg Itskhoki Marc Muendler Stephen Redding Harvard Princeton UC San Diego Princeton MEF Italia Dipartimento del Tesoro September 2014 1
More informationImport Protection as Export Destruction
Import Protection as Export Destruction Hiroyuki Kasahara Beverly Lapham December 2005 Incomplete Abstract his paper develops a dynamic, stochastic industry model of heterogeneous firms to examine the
More informationInternation1al Trade
4.58 International Trade Class notes on 4/8/203 The Armington Model. Equilibrium Labor endowments L i for i = ; :::n CES utility ) CES price index P = i= (w i ij ) P j n Bilateral trade ows follow gravity
More informationTHE GAINS FROM INPUT TRADE WITH HETEROGENEOUS IMPORTERS
THE GAINS FROM INPUT TRADE WITH HETEROGENEOUS IMPORTERS Joaquin Blaum Claire Lelarge Michael Peters August 216 Abstract Trade in intermediate inputs allows firms to reduce their costs of production and
More information14.461: Technological Change, Lecture 4 Competition and Innovation
14.461: Technological Change, Lecture 4 Competition and Innovation Daron Acemoglu MIT September 19, 2011. Daron Acemoglu (MIT) Competition and Innovation September 19, 2011. 1 / 51 Competition and Innovation
More informationFor Online Publication Online Appendix to: Merger Policy in a Quantitative Model of International Trade
For Online Publication Online Appendix to: Merger Policy in a Quantitative Model of International Trade Holger Breinlich Volker Nocke Nicolas Schutz August 26, 2018 A Proofs Notation: in the following,
More informationEconomic Development and the Spatial Allocation of Labor: Evidence From Indonesia. Gharad Bryan (LSE) Melanie Morten (Stanford) May 19, 2015
Economic Development and the Spatial Allocation of Labor: Evidence From Indonesia Gharad Bryan (LSE) Melanie Morten (Stanford) May 19, 2015 Gains from Spatial Reallocation of Labor? Remove observables
More informationAddendum to: International Trade, Technology, and the Skill Premium
Addendum to: International Trade, Technology, and the Skill remium Ariel Burstein UCLA and NBER Jonathan Vogel Columbia and NBER April 22 Abstract In this Addendum we set up a perfectly competitive version
More informationLecture 2: Firms, Jobs and Policy
Lecture 2: Firms, Jobs and Policy Economics 522 Esteban Rossi-Hansberg Princeton University Spring 2014 ERH (Princeton University ) Lecture 2: Firms, Jobs and Policy Spring 2014 1 / 34 Restuccia and Rogerson
More informationNon-Homothetic Gravity
Non-Homothetic Gravity by Weisi Xie (University of Colorado at Boulder) Discussion by Isaac Baley New York University August 14, 2014 Discussion by Baley (NYU) Non-Homothetic Gravity by Xie August 14,
More informationConsumption-led Growth
Consumption-led Growth (preliminary work in progress) Markus Brunnermeier markus@princeton.edu Pierre-Olivier Gourinchas pog@berkeley.edu Oleg Itskhoki itskhoki@princeton.edu Princeton University November
More informationPrices and Exchange Rates: A Theory of Disconnect
Prices and Exchange Rates: A Theory of isconnect Jose Antonio Rodriguez-Lopez September 2010 Appendix B Online) B.1 The Model with CES Preferences The purpose of this section is to show the similarities
More informationEstimating the effect of exchange rate changes on total exports
Estimating the effect of exchange rate changes on total exports Thierry Mayer (Science Po) and Walter Steingress (Banque de France) 12th CompNet Conference Prague 2016 Motivation Real Effective Exchange
More informationThe Origins of Firm Heterogeneity: A Production Network Approach
The Origins of Firm Heterogeneity: A Production Network Approach A. Bernard E. Dhyne G. Magerman K. Manova A. Moxnes Tuck@Dartmouth NBB ECARES Oxford Oslo CEPR, NBER UMons NBB CEPR CEPR Princeton, September
More information14.461: Technological Change, Lecture 3 Competition, Policy and Technological Progress
14.461: Technological Change, Lecture 3 Competition, Policy and Technological Progress Daron Acemoglu MIT September 15, 2016. Daron Acemoglu (MIT) Competition, Policy and Innovation September 15, 2016.
More informationFirm-to-Firm Trade: Imports, Exports, and the Labor Market. IEA: Mexico City. Jonathan Eaton, Samuel Kortum, Francis Kramarz.
Firm-to-Firm Trade: Imports, Exports, and the Labor Market Jonathan Eaton, Samuel Kortum, Francis Kramarz IEA: Mexico City June 2017 Overview Develop granular theory of rms, jobs, and international trade
More informationExternal Economies of Scale and Industrial Policy: A View from Trade
External Economies of Scale and Industrial Policy: A View from Trade Dominick Bartelme (Michigan) Arnaud Costinot (MIT) Dave Donaldson (MIT) Andrés Rodríguez-Clare (Berkeley) External Economies of Scale
More informationThe Geography of Development: Evaluating Migration Restrictions and Coastal Flooding
The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding Klaus Desmet SMU Dávid Krisztián Nagy Princeton University Esteban Rossi-Hansberg Princeton University World Bank, February
More informationWeb Appendix for Heterogeneous Firms and Trade (Not for Publication)
Web Appendix for Heterogeneous Firms and Trade Not for Publication Marc J. Melitz Harvard University, NBER and CEPR Stephen J. Redding Princeton University, NBER and CEPR December 17, 2012 1 Introduction
More informationPhD Topics in Macroeconomics
PhD Topics in Macroeconomics Lecture 18: aggregate gains from trade, part two Chris Edmond 2nd Semester 2014 1 This lecture Arkolakis, Costinot, Donaldson and Rodríguez-Clare (2012wp) 1- Absence of pro-competitive
More informationQuality and Gravity in International Trade
Quality and Gravity in International Trade FIW-Workshop "International Economics" Lisandra Flach Florian Unger University of Munich University of Munich 14. Juni 2016 Flach & Unger (LMU Munich) Quality
More informationSchumpeterian Growth Models
Schumpeterian Growth Models Yin-Chi Wang The Chinese University of Hong Kong November, 2012 References: Acemoglu (2009) ch14 Introduction Most process innovations either increase the quality of an existing
More informationTrade, Inequality and Costly Redistribution
Trade, Inequality and Costly Redistribution Pol Antràs Alonso de Gortari Oleg Itskhoki Harvard Harvard Princeton ILO Symposium September 2015 1 / 30 Introduction International trade raises real income
More informationR&D Investment, Exporting, and Productivity Dynamics
R&D Investment, Exporting, and Productivity Dynamics Bee Yan Aw, Mark J. Roberts, Daniel Yi Xu NASM 2009 Motivation Does openness to trade promote productivity? Exports and firm productivity are correlated
More informationTrade, Neoclassical Growth and Heterogeneous Firms
Trade, Neoclassical Growth and eterogeneous Firms Julian Emami Namini Department of Economics, University of Duisburg Essen, Campus Essen, Germany Email: emami@vwl.uni essen.de 10th March 2006 Abstract
More informationCompetitive Search: A Test of Direction and Efficiency
Bryan Engelhardt 1 Peter Rupert 2 1 College of the Holy Cross 2 University of California, Santa Barbara November 20, 2009 1 / 26 Introduction Search & Matching: Important framework for labor market analysis
More informationGlobal Value Chain Participation and Current Account Imbalances
Global Value Chain Participation and Current Account Imbalances Johannes Brumm University of Zurich Georgios Georgiadis European Central Bank Johannes Gräb European Central Bank Fabian Trottner Princeton
More informationLecture #11: Introduction to the New Empirical Industrial Organization (NEIO) -
Lecture #11: Introduction to the New Empirical Industrial Organization (NEIO) - What is the old empirical IO? The old empirical IO refers to studies that tried to draw inferences about the relationship
More informationTrade and Domestic Policy in Models with Monopolistic Competition
Trade and Domestic Policy in Models with Monopolistic Competition Alessia Campolmi Università di Verona Harald Fadinger University of Mannheim and CEPR Chiara Forlati University of Southampton February
More informationInterest Rate Liberalization and Capital Misallocation 1
Interest Rate Liberalization and Capital Misallocation 1 Zheng Liu 1 Pengfei Wang 2 Zhiwei Xu 3 1 Federal Reserve Bank of San Francisco 2 Hong Kong University of Science and Technology 3 Shanghai Jiao
More informationGravity Models and the Armington Assumption
Gravity Models and the Armington Assumption Background Economists love the elegance and completeness of physics, and what could be more elegant than Newton s Law of Universal Gravity? To recap: The gravitational
More informationImporting Skill-Biased Technology
Importing Skill-Biased Technology Ariel Burstein Javier Cravino Jonathan Vogel January 2012 Intro Motivation Observations Capital equipment (e.g. computers and industrial machinery): Implication embodies
More informationQuality and Gravity in International Trade
Quality and Gravity in International Trade Lisandra Flach University of Munich, CESifo and CEPR Florian Unger University of Munich June 3, 2018 Abstract This paper introduces endogenous quality innovations
More informationMarket Structure and Productivity: A Concrete Example. Chad Syverson
Market Structure and Productivity: A Concrete Example. Chad Syverson 2004 Hotelling s Circular City Consumers are located uniformly with density D along a unit circumference circular city. Consumer buys
More informationFirm Entry, Trade, and Welfare in Zipf s World
Firm Entry, Trade, and Welfare in Zipf s World Julian di Giovanni International Monetary Fund Andrei A. Levchenko University of Michigan and NBER August 20, 200 Abstract Firm size follows Zipf s Law, a
More informationTrade Policies, Firm Heterogeneity, and Variable Markups
Trade Policies, Firm Heterogeneity, and Variable arkups Svetlana Demidova caster University ay 29, 204 Abstract In this paper we explore the effects of trade policy in form of wasteful and non-wasteful
More informationThe Macro Impact of Micro Shocks: Beyond Hulten s Theorem
The Macro Impact of Micro Shocks: Beyond Hulten s Theorem David R. Baqaee and Emmanuel Farhi Discussion by Basile Grassi 1 1 Department of Economics, Nuffield College, University of Oxford 25th CEPR European
More informationInequality, Costly Redistribution and Welfare in an Open Economy
Inequality, Costly Redistribution and Welfare in an Open Economy Pol Antràs Alonso de Gortari Oleg Itskhoki Harvard Harvard Princeton TRISTAN Workshop University of Bayreuth June 2016 1 / 29 Introduction
More informationThe Extensive Margin of Exporting Products: The Continuum Case
The Extensive Margin of Exporting Products: The Continuum Case Costas Arkolakis Yale University, CESifo and NBER Marc-Andreas Muendler UC San Diego, CESifo and NBER First version: November 13, 2007 This
More informationEndogenous information acquisition
Endogenous information acquisition ECON 101 Benhabib, Liu, Wang (2008) Endogenous information acquisition Benhabib, Liu, Wang 1 / 55 The Baseline Mode l The economy is populated by a large representative
More informationEstimating the Productivity Gains from Importing [Preliminary - Comments welcome]
Estimating the Productivity Gains from Importing [Preliminary - Comments welcome] Joaquin Blaum, Claire Lelarge, Michael Peters September 204 Abstract Trade in intermediate inputs raises firm productivity
More informationTechnical Appendix. The Steady State
Technical Appendix A The Steady State We denote constant, steady-state levels of variables by dropping the time subscript and assume = fe, f = f, τ = τ, L = L,andZ = Z =1. Under these assumption, the steady
More informationMotivation A Figure 1 Figure 2 Table 1 Table 2
Future Work Motivation A Figure 1 Figure 2 Table 1 Table 2 Motivation B Markup Di erences: SOEs vs. POEs Markup Di erences Across Sectors Sectoral Di erences Motivation Key Novelty Model Trade Liberalization,
More informationThe Impact of Trade Liberalization on Industrial Productivity
The Impact of Trade Liberalization on Industrial Productivity Paul S. Segerstrom Stockholm School of Economics Yoichi Sugita Stockholm School of Economics First version: June 22, 2012 Current version:
More informationMisallocation Under Trade Liberalization
Misallocation Under Trade Liberalization Yan Bai Keyu Jin Dan Lu University of Rochester LSE University of Rochester NBER CEPR November 14, 2018 Abstract What is the impact of trade liberalization on economies
More informationInnovation, Firm Dynamics, and International Trade
Innovation, Firm Dynamics, and International Trade Andrew Atkeson y and Ariel Burstein z February 2009 Abstract We present a general equilibrium model of the decisions of rms to innovate and to engage
More informationThe Elusive Pro-Competitive Effects of Trade
The Elusive Pro-Competitive Effects of Trade Costas Arkolakis Yale and NBER Arnaud Costinot MIT and NBER Dave Donaldson Stanford and NBER Andrés Rodríguez-Clare UC Berkeley and NBER July 2017 Abstract
More information(a) Write down the Hamilton-Jacobi-Bellman (HJB) Equation in the dynamic programming
1. Government Purchases and Endogenous Growth Consider the following endogenous growth model with government purchases (G) in continuous time. Government purchases enhance production, and the production
More informationGlobalization, Inequality and Welfare
Globalization, Inequality and Welfare Pol Antràs Harvard University Alonso de Gortari Harvard University Oleg Itskhoki Princeton University Harvard - September 7, 2016 Antràs, de Gortari and Itskhoki Globalization,
More informationWages, Unemployment and Inequality with Heterogeneous Firms and Workers
Wages, Unemployment and Inequality with Heterogeneous Firms and Workers Elhanan Helpman Oleg Itskhoki Stephen Redding Harvard and CIFAR Harvard LSE and CEP Penn State June 12, 2008 1 / 28 Introduction
More informationImperfect Competition and Misallocations
Imperfect Competition and Misallocations Yan Liang London School of Economics, CFM Latest version here This version: July 2017 Abstract Misallocation of resources across production units lowers aggregate
More informationThe Matching and Sorting of Exporting and Importing Firms: Theory and Evidence. Felipe Benguria 1. May Abstract
The Matching and Sorting of Exporting and Importing Firms: Theory and Evidence Felipe Benguria 1 May 214 Abstract This paper develops a general equilibrium model of international trade with heterogeneous
More informationTrade policy III: Export subsidies
The Vienna Institute for International Economic Studies - wiiw June 25, 2015 Overview Overview 1 1 Under perfect competition lead to welfare loss 2 Effects depending on market structures 1 Subsidies to
More information14.461: Technological Change, Lecture 4 Technology and the Labor Market
14.461: Technological Change, Lecture 4 Technology and the Labor Market Daron Acemoglu MIT September 20, 2016. Daron Acemoglu (MIT) Technology and the Labor Market September 20, 2016. 1 / 51 Technology
More informationThe Gains From Input Trade in Firm-Based Models of Importing
The Gains From Input Trade in Firm-Based Models of Importing Joaquin Blaum, Claire Lelarge, Michael Peters June 205 Abstract Trade in intermediate inputs allows firms to lower their costs of production
More informationMicro Data for Macro Models Topic 5: Trends in Concentration, Competition, and Markups
Micro Data for Macro Models Topic 5: Trends in Concentration, Competition, and Markups Thomas Winberry November 27th, 2017 1 Overview of Topic 5 1. Potentially related trends since 1980 Aggregate factor
More informationImport Protection as Export Destruction
Western University Scholarship@Western Economic Policy Research Institute. EPRI Working Papers Economics Working Papers Archive 2006 2006-2 Import Protection as Export Destruction Hiroyuki Kasahara Beverly
More informationThe Role of the Most Favored Nation Principle of the GATT/WTO in the New Trade Model
The Role of the Most Favored Nation Principle of the GATT/WTO in the New Trade Model Wisarut Suwanprasert Vanderbilt University June 15th, 2017 Present at Puey Ungphakorn Institute for Economic Research
More informationSpatial Misallocation across Chinese Firms PRELIMINARY, DO NOT QUOTE
Spatial Misallocation across Chinese Firms Xiaolu Li Nanyang Technological University Yang Tang Nanyang Technological University February 29, 2016 Lin Ma National University of Singapore PRELIMINARY, DO
More informationSentiments and Aggregate Fluctuations
Sentiments and Aggregate Fluctuations Jess Benhabib Pengfei Wang Yi Wen October 15, 2013 Jess Benhabib Pengfei Wang Yi Wen () Sentiments and Aggregate Fluctuations October 15, 2013 1 / 43 Introduction
More informationMonopolistic Competition when Income Matters
Monopolistic Competition when Income Matters Paolo Bertoletti and Federico tro University of Pavia and Ca Foscari University, Venice Hitotsubashi University, March 6, 2014 Purpose We propose an alternative
More informationInternational Trade Lecture 3: Ricardian Theory (II)
14.581 International Trade Lecture 3: Ricardian Theory (II) 14.581 Week 2 Spring 2013 14.581 (Week 2) Ricardian Theory (I) Spring 2013 1 / 34 Putting Ricardo to Work Ricardian model has long been perceived
More informationTechnological Spillovers and Dynamics of Comparative Advantage
Technological Spillovers and Dynamics of Comparative Advantage Yury Yatsynovich University of California, Berkeley January 21, 2015 MOTIVATION Comparative advantage is dynamic: Korea from rice to microchips.
More informationClass Notes on New Economic Geography Models
Class Notes on New Economic Geography Models Econ 8401-T.Holmes (incomplete) 1 Overview Last class we discussed various models of trade with increasing returns, e.g. those based on Dixit and Stiglitz models.
More informationA Theory of Entry into and Exit from Export Markets
A Theory of Entry into and Exit from Export Markets Giammario Impullitti, Cambridge University Alfonso A. Irarrazabal, Norges Bank Luca David Opromolla Banco de Portugal & UECE November 1, 2012 Abstract
More informationproblem. max Both k (0) and h (0) are given at time 0. (a) Write down the Hamilton-Jacobi-Bellman (HJB) Equation in the dynamic programming
1. Endogenous Growth with Human Capital Consider the following endogenous growth model with both physical capital (k (t)) and human capital (h (t)) in continuous time. The representative household solves
More informationAggregate Implications of Innovation Policy
Aggregate Implications of Innovation Policy Andrew Atkeson University of California, Los Angeles, Federal Reserve Bank of Minneapolis, and National Bureau of Economic Research Ariel T. Burstein University
More informationCROSS-COUNTRY DIFFERENCES IN PRODUCTIVITY: THE ROLE OF ALLOCATION AND SELECTION
ONLINE APPENDIX CROSS-COUNTRY DIFFERENCES IN PRODUCTIVITY: THE ROLE OF ALLOCATION AND SELECTION By ERIC BARTELSMAN, JOHN HALTIWANGER AND STEFANO SCARPETTA This appendix presents a detailed sensitivity
More informationFirms, Contracts, and Trade Structure: Slides
Firms, Contracts, and Trade Structure: Slides Alexander Tarasov University of Munich Summer 2012 Alexander Tarasov (University of Munich) Antràs (2003) Summer 2012 1 / 34 Motivation For the United States,
More informationLecture 2. (1) Aggregation (2) Permanent Income Hypothesis. Erick Sager. September 14, 2015
Lecture 2 (1) Aggregation (2) Permanent Income Hypothesis Erick Sager September 14, 2015 Econ 605: Adv. Topics in Macroeconomics Johns Hopkins University, Fall 2015 Erick Sager Lecture 2 (9/14/15) 1 /
More informationVariable Demand Elasticity, Markups, and. Pass-Through
Variable Demand Elasticity, Markups, and Pass-Through Costas Arkolakis Yale University Monica Morlacco Yale University This Version: August 2017 PRELIMINARY AND INCOMPLETE Abstract In these notes we analyze
More informationNew Notes on the Solow Growth Model
New Notes on the Solow Growth Model Roberto Chang September 2009 1 The Model The firstingredientofadynamicmodelisthedescriptionofthetimehorizon. In the original Solow model, time is continuous and the
More informationENTRY, EXIT AND MISALLOCATION FRICTIONS JOB MARKET PAPER 1
ENTRY, EXIT AND MISALLOCATION FRICTIONS ROBERTO N. FATTAL JAEF UNIVERSITY OF CALIFORNIA, LOS ANGELES JOB MARKET PAPER 1 Abstract. Frictions that misallocate resources across heterogeneous firms may lead
More informationThe Matching and Sorting of Exporting and Importing Firms: Theory and Evidence. Felipe Benguria 1. July Abstract
The Matching and Sorting of Exporting and Importing Firms: Theory and Evidence Felipe Benguria 1 July 215 Abstract This paper develops a general equilibrium model of international trade with heterogeneous
More informationWHY ARE THERE RICH AND POOR COUNTRIES? SYMMETRY BREAKING IN THE WORLD ECONOMY: A Note
WHY ARE THERE RICH AND POOR COUNTRIES? SYMMETRY BREAKING IN THE WORLD ECONOMY: A Note Yannis M. Ioannides Department of Economics Tufts University Medford, MA 02155, USA (O): 1 617 627 3294 (F): 1 617
More informationProductivity Improvements and Falling Trade Costs: Boon or Bane?
Productivity Improvements and Falling Trade Costs: Boon or Bane? Svetlana Demidova y The Pennsylvania State University This version: February 24, 2006. Abstract This paper looks at two features of globalization,
More informationNBER WORKING PAPER SERIES NEW TRADE MODELS, SAME OLD GAINS? Costas Arkolakis Arnaud Costinot Andrés Rodríguez-Clare
NBER WORKING PAPER SERIES NEW TRADE MODELS, SAME OLD GAINS? Costas Arkolakis Arnaud Costinot Andrés Rodríguez-Clare Working Paper 5628 http://www.nber.org/papers/w5628 NATIONAL BUREAU OF ECONOMIC RESEARCH
More informationLecture 4: The Heckscher-Ohlin Model With Many Goods and Factors
Lecture 4: The Heckscher-Ohlin Model With Many Goods and Factors Gregory Corcos gregory.corcos@polytechnique.edu Isabelle Méjean isabelle.mejean@polytechnique.edu International Trade Université Paris-Saclay
More informationSkilled Factor Abundance and Traded Goods Prices
Skilled Factor Abundance and Traded Goods Prices Eddy Bekkers University of Bern Joseph Francois University of Bern and CEPR London Miriam Manchin University College London ABSTRACT: We develop a monopolistic
More informationNominal Rigidity and the Idiosyncratic Origin of Aggregate. Fluctuations
Nominal Rigidity and the Idiosyncratic Origin of Aggregate Fluctuations Ernesto Pasten, Raphael Schoenle, Michael Weber Februay 2016 PRELIMINARY AND INCOMPLETE PLEASE DO NOT CITE Abstract We study the
More informationFirms, Contracts, and Trade Structure: Slides
Firms, Contracts, and Trade Structure: Slides Alexander Tarasov University of Munich Summer 2010 Alexander Tarasov (University of Munich) Antràs (2003) and Antras and Helpman (2004) Summer 2010 1 / 35
More information14.461: Technological Change, Lectures 7 and 8 Innovation, Reallocation and Growth
14.461: Technological Change, Lectures 7 and 8 Innovation, Reallocation and Growth Daron Acemoglu MIT September 26 and 30, 2014. Daron Acemoglu (MIT) Innovation, Reallocation and Growth September 26 and
More informationAggregate Demand, Idle Time, and Unemployment
Aggregate Demand, Idle Time, and Unemployment Pascal Michaillat (LSE) & Emmanuel Saez (Berkeley) September 2014 1 / 44 Motivation 11% Unemployment rate 9% 7% 5% 3% 1974 1984 1994 2004 2014 2 / 44 Motivation
More informationSELECTION EFFECTS WITH HETEROGENEOUS FIRMS: ONLINE APPENDIX
SELECTION EFFECTS WITH HETEROGENEOUS FIRMS: ONLINE APPENDIX Monika Mrázová University of Geneva and CEPR J. Peter Neary University of Oxford, CEPR and CESifo Appendix K: Selection into Worker Screening
More informationRedistributive Taxation in a Partial-Insurance Economy
Redistributive Taxation in a Partial-Insurance Economy Jonathan Heathcote Federal Reserve Bank of Minneapolis and CEPR Kjetil Storesletten Federal Reserve Bank of Minneapolis and CEPR Gianluca Violante
More informationConsumption-led Growth
Consumption-led Growth Markus Brunnermeier markus@princeton.edu Pierre-Olivier Gourinchas pog@berkeley.edu Oleg Itskhoki itskhoki@princeton.edu February 7 218 preliminary and incomplete Abstract What is
More information