Eco-Labeling and the Gains from Agricultural and Food Trade: A Ricardian Approach
|
|
- Mabel Ellis
- 6 years ago
- Views:
Transcription
1 Eco-Labeling and the Gains from Agricultural and Food Trade: A Ricardian Approach Kari Heerman (ERS/USDA) Ian Sheldon (Ohio State University) Jihyun Eum (Ohio State University) Seminar University of Wyoming April 21, 2017 Laramie, WY
2 Motivation Analysis of agricultural system should recognize extent of vertical product differentiation, e.g., environmental claims (Sexton, 2013) Eco-labeling key to resolving information asymmetry associated with environmental credence goods Rapid growth of eco-labeling relating to food and agricultural products since 1970s (Gruére, 2013) Trade often expected to generate negative externalities (Copeland and Taylor, 2004) However, if production generates environmental benefits, eco-labeling beneficial (Swinnen, 2015)
3 Outline Develop Ricardian-type model drawing on Eaton and Kortum (2002), and others including, inter alia, Waugh (2010), Fieler (2011), Levchenko and Zhang (2014) Class of model already applied to agricultural trade by Reimer and Li (2010), Reimer (2015), and Heerman et al. (2015) Use to derive comparative statics concerning impact of labeling of and trade in eco-friendly products Lay out recipe for calibrating model, and initial estimation of gravity equation
4 Modern Ricardian Approach Difficult to adapt Dornbusch, Fischer and Samuelson (1977) to multi-country setting Contribution of Eaton and Kortum (2002): focus on parameters of productivity distribution Given country will be more productive than others at producing range of goods in continuum generates reason for trade Generates gravity-like structure between share of spending on imports and trade costs (Arkolakis, Costinot and Rodriguez-Clare, 2012)
5 Model I countries trade products j, produced along continuum, producers having access to LC and EF: q i LC j = z i j L i q i EF j = z i j L i α H i 1 α z i j distributed independently as Fréchet: F i z = exp T i z θ Prices offered by exporter i in n: p LC ni j = r iτ ni z i (j) p ni EF j = κr i α w i 1 α τ ni ζ ni z i j
6 Model Consumers in n buy LC and EF products at lowest price on offer: p n k j = min i p k ni Productivity distribution used to derive distributions of EF price offers by i in n, and prices of EF products offered in n : G EF ni p = 1 exp T i κr α i w 1 α θ i τ ni ζ ni p θ j G n EF p = 1 exp Φ n EF p θ where: Φ EF I n = l=1 T l κr l α w l 1 α τ nl ζ nl θ
7 Model Setting α = ζ ni = 1 : G LC ni p = 1 exp T i r i τ θ ni p θ G LC n (p) = 1 exp Φ LC n p θ where: Φ LC I n = l=1 T l r l τ nl θ Φ n k, k=ef,lc describe how average productivity, input costs, trade and labeling costs around world affect prices of each type of good in each import market Lower trade costs allow consumption with smaller environmental impact, even without reallocation of consumption to EF products
8 Model Using price distributions, probability i offers lowest prices of EF and LC products in n: π EF ni = T i κr α i w 1 α θ i τ ni ζ ni EF Φ n π LC ni = T i r i τ θ ni LC Φ n With continuum, these are also fraction of products that consumers in n purchase from i: k X ni k X = π k 1 ni 0 Q k j dj k pdgn 0 p k 1 n Q k π j dj k ni (1) pdgn 0 p 0
9 Model Consumers have preferences over products, choosing EF and LC to maximize: σ σ q i LC j σ 1 σ dj + ω i 1 σ 0 1 q i EF j σ 1 σ Implies total expenditure on EF relative to LC: X i EF X i LC = ω i P i EF P i LC 1 σ P i k is CES price index, Pi k = γφ n k 1/θ, k = LC, EF consumers only choose EF if labeled dj
10 Comparative Statics: Labeling Labeling increases EF trade flows: (i) Labeling increases share of EF expenditure on imports: π EF nn = T n κr α 1 α n w θ n EF = Φ n I l=1 T n κr n α w n 1 α θ T l κr l α w l 1 α τ nl ζ nl θ Without labeling ζ ni =, consumers do not recognize imported EF as distinct from LC products, therefore: Φ EF n = T n κr α 1 α n w θ n and π EF nn = 1 As labeling costs fall, Φ n EF increases and π nn EF falls, i.e., import share of expenditure on EF products rises
11 Comparative Statics: Labeling (ii) Labeling increases share of total expenditure allocated to EF products: By definition, X i = X i EF + X i LC, therefore: X i EF = ω i X i 1 + ω i p i EF p i EF p i LC 1 σ p i LC 1 σ Recall p n EF = γφ n EF 1/θ, so lower labeling costs implies lower prices for EF products Therefore, since lower labeling costs have no impact on Φ LC n, introducing EF labels lowers p EF LC i p i
12 Comparative Statics: Land and EF Optimal land allocation implies: EF L i LC L = n π EF EF ni X n LC EF i X n X n n π ni Already established that π EF ni increases with eco labeling, as does share of expenditure allocated to EF X n X n EF is also decreasing in import markets where labeling of i s EF products is introduced Therefore, share of land allocated to EF production increases for exporter i
13 Comparative Statics: Mutual recognition Recognition of i s labeling in n implies: Φ n EF π EF ni = T α 1 α θ i κr i wi τni ΦEF n = T n κr n α w n 1 α θ + T i κr i α w i 1 α τ ni θ + l i,n T l κr l α w l 1 α τ nl ζ nl θ Φ n EF increases, and given: Φ n EF Φ n LC = p EF i LC p i Relative price of EF products declines, EF trade flows increase for fixed level of expenditure θ
14 Model: Solution and parameterization Given T i, τ ni, ζ ni, H i and ω i, equilibrium is r i, w i, π LC ni, π EF ni, X LC i, X EF i and L LC i, L EF i, such that input markets clear and trade is balanced Solve for LC-type equilibrium variables, obtaining land rental rate r i, and then solve for equilibrium w i, and EF-type equilibrium values Parameterization/calibration requires values for T i, θ, τ ni, ζ ni, σ, and ω i Standard approach: log-linearize (1) and estimate gravity-like equation to get, T i, and τ ni, use values of θ and σ from literature, and solve for ζ ni and ω i
15 Model: Solution and parameterization Table 1: Key Parameters α Land s value-added share in organic 0.65 (OECD, 2009) production (1-average labor share of valueadded) w i Solve out assuming H i =1 for all countries Calibrate r i Country s agricultural output/hectare of World Bank (2012) arable land T i Mean parameter for productivity distribution Estimate θ Dispersion parameter for productivity 2.83 (Reimer and Li, 2010) distribution τ ni Bilateral trade costs Estimate ζ ni Organic labeling costs in market n in excess of exporter i s labeling costs Calibrate σ Elasticity of substitution 1.5 (Ruhl, 2008) ω i Consumer love of sustainability Calibrate
16 Model: Solution and parameterization Normalize π LC ni by π LC nn : LC LC -θ π ni X ni Ti ( riτ ni ) Ti ri = = = LC LC -θ π nn X nn Tn( rn ) Tn rn and taking the log: LC X ni Ti ri ln = ln -θ ln -θ lnτ LC ni X nn Tn rn Following Reimer and Li (2010), define: S i = ln T i θln(r i ) -θ τ -θ ni
17 Model: Solution and parameterization Substituting S i in for T i : LC X ni ln = -θ ln τ ni + S i - S LC n X nn Gravity-like structural relationship in LC: ln X LC ni LC = S i θ b ni + l ni + RTA ni + X nn where: c d cni + ex i S n θln τ ni = b ni + l ni + RTA ni + c d cni + ex i + ξ ni
18 Gravity Equation Estimates Variable D1 (0,375) *** (0.50) *** (0.45) D2 (375,750) *** (0.30) *** (0.28) D3 (750, 1500) *** (0.20) *** (0.20) D4 (1500, 3000) *** (0.14) *** (0.15) D5 (3000, 6000) *** (0.08) *** (0.09) D6 (6000, max) *** (0.17) *** (0.12) Border 1.30*** (0.45) 1.01*** (0.41) Language 1.35*** (0.18) 1.30*** (0.19) RTA 2.88*** (0.21) 3.35*** (0.21) Adjusted R Sample-size 11,955 12,099 *** Significant at 1 percent level
19 lnt i (2010, θ=2.83)
20 lnt i (2013, θ=2.83)
21 Next Steps Use parameterized model to evaluate impact of alternative eco-labelling policies: - Mutual recognition - Regulatory harmonization Allow for non-homothetic preferences to explore impact of income differences across i (Fieler, 2011), i.e., North vs. South and differing standards Introduce explicit environmental damage function Use pesticide standards to pin down weight ω i on consumer preferences in utility function
Eco-labeling and the Gains from Agricultural and Food Trade: A Ricardian Approach
Eco-labeling and the Gains from Agricultural and Food Trade: A Ricardian Approach Kari Heerman (ERS/USDA) Ian Sheldon (Ohio State University) Jihyun Eum (Ohio State University) Seminar Colorado State University
More informationDornbusch, Fischer, Samuelson (DFS) Model
Dornbusch, Fischer, Samuelson (DFS) Model Seyed Ali Madanizadeh Sharif U. of Tech. April 2014 Seyed Ali Madanizadeh (Sharif U. of Tech.) Dornbusch, Fischer, Samuelson (DFS) Model April 2014 1 / 27 Introduction
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 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 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 Trade 31E00500
International Trade 31E00500 Lecture 6: Intra-industry trade and Gravity modelling Saara Tamminen 1 1 VATT Institute of Economic Research, Finland Winter 2016 Tamminen (VATT) Lecture 6 21.1.2016 1 / 53
More informationLecture 1: Ricardian Theory of Trade
Lecture 1: Ricardian Theory of Trade Alfonso A. Irarrazabal University of Oslo September 25, 2007 Contents 1 Simple Ricardian Model 3 1.1 Preferences................................. 3 1.2 Technologies.................................
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 informationWelfare in the Eaton-Kortum Model of International Trade
Welfare in the Eaton-Kortum Model of International Trade Scott French October, 215 Abstract I show that the welfare effects of changes in technologies or trade costs in the workhorse Ricardian model of
More informationVertical Product Differentiation and Credence Goods: Mandatory Labeling and Gains from International Integration
Vertical Product Differentiation and Credence Goods: Mandatory Labeling and Gains from International Integration Ian Sheldon and Brian Roe (The Ohio State University Quality Promotion through Eco-Labeling:
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 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 informationStructural change in a multi-sector model of the climate and the economy
Structural change in a multi-sector model of the climate and the economy Gustav Engström The Beijer Institute of Environmental Economics Stockholm, December 2012 G. Engström (Beijer) Stockholm, December
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 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 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 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 informationAddendum to: New Trade Models, Same Old Gains?
Addendum to: New Trade Models, Same Old Gains? Costas Arkolakis Yale and NBER Arnaud Costinot MIT and NBER September 5, 200 Andrés Rodríguez-Clare Penn State and NBER Abstract This addendum provides generalizations
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 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 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 informationOn the Geography of Global Value Chains
On the Geography of Global Value Chains Pol Antràs and Alonso de Gortari Harvard University March 31, 2016 Antràs & de Gortari (Harvard University) On the Geography of GVCs March 31, 2016 1 / 27 Introduction
More informationInternational Trade Lecture 9: Factor Proportion Theory (II)
14.581 International Trade Lecture 9: Factor Proportion Theory (II) 14.581 Week 5 Spring 2013 14.581 (Week 5) Factor Proportion Theory (II) Spring 2013 1 / 24 Today s Plan 1 Two-by-two-by-two Heckscher-Ohlin
More informationNew Trade Models, Same Old Gains?
New Trade Models, Same Old Gains? Costas Arkolakis Yale and NBER Arnaud Costinot MIT and NBER September 6, 200 Andrés Rodríguez-Clare Penn State and NBER Abstract Micro-level data have had a profound in
More informationImported Inputs and the Gains from Trade
Imported Inputs and the Gains from Trade Ananth Ramanarayanan University of Western Ontario February, 204 Abstract The bulk of international trade takes place in intermediate inputs as opposed to goods
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 informationQuantifying the effects of NTMs. Xinyi Li Trade Policies Review Division, WTO Secretariat 12 th ARTNeT Capacity Building Workshop December 2016
Quantifying the effects of NTMs Xinyi Li Trade Policies Review Division, WTO Secretariat 12 th ARTNeT Capacity Building Workshop December 2016 1 Approaches to quantifying NTMs Chen and Novy (2012) described
More information1. Constant-elasticity-of-substitution (CES) or Dixit-Stiglitz aggregators. Consider the following function J: J(x) = a(j)x(j) ρ dj
Macro II (UC3M, MA/PhD Econ) Professor: Matthias Kredler Problem Set 1 Due: 29 April 216 You are encouraged to work in groups; however, every student has to hand in his/her own version of the solution.
More informationAEA Continuing Education Program. International Trade. Dave Donaldson, MIT
AEA Continuing Education Program International Trade Dave Donaldson, MIT January 6-8, 2019 AEA Continuing Education: International Trade Lecture 1: The Ricardian Model 1 Dave Donaldson (MIT) AEA Cont.
More informationCredence Goods and Vertical Product Differentiation: The Impact of Labeling Policies* Ian Sheldon (Ohio State University)
Credence Goods and Vertical Product Differentiation: The Impact of Labeling Policies* Ian Sheldon (Ohio State University) Seminar: North Dakota State University, Fargo, ND, May, 6 * Draws on Roe and Sheldon
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 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 informationAnalysis of a two country version of Eaton-Kortum Model of trade
Analysis of a two country version of Eaton-Kortum Model of trade Yim Hing Ho Master thesis for the Master of Samfunnsøkonomisk analyse (master fem år) UNIVERSITETET I OSLO February 20 Preface First of
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 informationThe Dynamics of the U.S. Trade Balance and the Real Exchange Rate: The J Curve and Trade Costs? by George Alessandria (Rochester) Horag Choi (Monash)
Discussion of The Dynamics of the U.S. Trade Balance and the Real Exchange Rate: The J Curve and Trade Costs? by George Alessandria (Rochester) Horag Choi (Monash) Brent Neiman University of Chicago and
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 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 informationMonopolistic Competition in Trade III Trade Costs and Gains from Trade
Monopolistic Competition in Trade III Trade Costs and Gains from Trade Notes for Graduate International Trade Lectures J. Peter Neary University of Oxford January 21, 2015 J.P. Neary (University of Oxford)
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 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 informationHomework 3 - Partial Answers
Homework 3 - Partial Answers Jonathan Heathcote Due in Class on Tuesday February 28th In class we outlined two versions of the stochastic growth model: a planner s problem, and an Arrow-Debreu competitive
More informationDiscussion Papers In Economics And Business
Discussion Papers In Economics And Business Nonlinear Effects of the Transport Costs on the Wage Inequality Yuichiro Matsumoto Discussion Paper 18-07 Graduate School of Economics and Osaka School of International
More informationA t = B A F (φ A t K t, N A t X t ) S t = B S F (φ S t K t, N S t X t ) M t + δk + K = B M F (φ M t K t, N M t X t )
Notes on Kongsamut et al. (2001) The goal of this model is to be consistent with the Kaldor facts (constancy of growth rates, capital shares, capital-output ratios) and the Kuznets facts (employment in
More informationMonopolistic competition and trade: does the theory carry any empirical weight?
Monopolistic competition and trade: does the theory carry any empirical weight? Ian Sheldon The Ohio State University Paper prepared for IATRC Theme Day, New Dimensions in Modeling Food and Agricultural
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 informationNew Terrain in International Trade
New Terrain in International Trade Samuel Kortum, Yale University Society for Economic Dynamics, Warsaw 27 June 2015 Map of the Terrain Starting Point: Ricardian Trade: Multiple countries, with Jonathan
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 informationGravity Equation. Seyed Ali Madanizadeh. April Sharif U. of Tech. Seyed Ali Madanizadeh (Sharif U. of Tech.) Gravity Equation April / 16
Gravity Equation Seyed Ali Madanizadeh Sharif U. of Tech. April 2014 Seyed Ali Madanizadeh (Sharif U. of Tech.) Gravity Equation April 2014 1 / 16 Gravity equation: relates bilateral trade volumes X ni
More informationNBER WORKING PAPER SERIES AGGREGATION AND THE GRAVITY EQUATION. Stephen J. Redding David E. Weinstein
NBER WORKING PAPER SERIES AGGREGATION AND THE GRAVITY EQUATION Stephen J. Redding David E. Weinstein Working Paper 25464 http://www.nber.org/papers/w25464 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts
More informationNew Trade Models, Same Old Optimal Policies?
New Trade Models, Same Old Optimal Policies? Gabriel Felbermayr, Benjamin Jung, and Mario Larch October 2, 2012 Abstract Do new trade models featuring imperfect competition and extensive margins have novel
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Fall, 202 Answer Key to Section 2 Questions Section. (Suggested Time: 45 Minutes) For 3 of
More informationMultinational Production and Comparative Advantage
Multinational Production and Comparative Advantage Vanessa Alviarez Sauder Business School University of British Columbia May, 2015 Multinational Production (MP) and Sectoral Productivity What is the relationship
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 informationUse Eaton Kortum model to look at very cool data
Railroads of the Raj Dave Donaldson, MIT Impact of transportation on: Prices Welfare Use Eaton Kortum model to look at very cool data Background about RR in India 1860 1870 1880 1890 1900 1910 1920 1930
More informationInnovation, Trade, and Growth
Innovation, Trade, and Growth Jonathan Eaton and Samuel Kortum June 2004 PRELIMIARY AD ICOMPLETE June 0, 2004 Abstract We consider the interaction of trade and technology di usion in a two-region model
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 informationQuality Heterogeneity and Misallocation: The Welfare Benefits of Raising your Standards Other VES Preferences
Quality Heterogeneity and Misallocation: The Welfare Benefits of Raising your Standards Other VES Preferences Luca Macedoni Aarhus University Ariel Weinberger University of Oklahoma November 2018 In this
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 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 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 informationDemand Structure as a Determinant of International Trade and Structural Change
University of Colorado, Boulder CU Scholar Economics Graduate Theses & Dissertations Economics Spring 1-1-2015 Demand Structure as a Determinant of International Trade and Structural Change Weisi Xie University
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 informationWelfare Evaluation in a Heterogeneous Agents Model: How Representative is the CES Representative Consumer?
Welfare Evaluation in a Heterogeneous Agents Model: How Representative is the CES Representative Consumer? Maria D. Tito August 7, 0 Preliminary Draft: Do not cite without permission Abstract The aim of
More informationVoluntary Standards and International Trade: A Heterogeneous Firms Approach
Voluntary Standards and International Trade: A Heterogeneous Firms Approach William McGuire 1 Department of Agricultural, Environmental and Development Economics Agricultural Administration Building 2120
More informationComparative Advantage and Biased Gravity
Comparative Advantage and Biased Gravity Scott French January, 2017 Abstract Gravity estimation based on sector-level trade data is generally misspecified because it ignores the role of product-level comparative
More informationEquilibrium in a Production Economy
Equilibrium in a Production Economy Prof. Eric Sims University of Notre Dame Fall 2012 Sims (ND) Equilibrium in a Production Economy Fall 2012 1 / 23 Production Economy Last time: studied equilibrium in
More informationAgricultural Productivity, Comparative Advantage, and Economic Growth Kiminori Matsuyama
Agricultural Productivity,, and Economic Growth Kiminori Krishna Teja Indian Statistical Institute April 12, 2016 This paper falls under the broad topic of Structural Transformation Overview 1 2 3 4 This
More informationChapter 4. Applications/Variations
Chapter 4 Applications/Variations 149 4.1 Consumption Smoothing 4.1.1 The Intertemporal Budget Economic Growth: Lecture Notes For any given sequence of interest rates {R t } t=0, pick an arbitrary q 0
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 informationAsymmetric Trade Costs, Trade Imbalances, and the World Income Distribution
Asymmetric Trade Costs, Trade Imbalances, and the World Income Distribution Peter Egger ETH Zurich CEPR, CESifo, GEP, WIFO Sergey Nigai ETH Zurich March 25, 2012 Abstract Earlier work by Waugh (2010) suggests
More informationCommuting, Migration and Local Employment Elasticities
Commuting, Migration and Local Employment Elasticities Ferdinando Monte Georgetown University Stephen J. Redding Princeton University Esteban Rossi-Hansberg Princeton University June 15, 2015 Abstract
More informationStructural Change, Demographic Transition and Fertility Di erence
Structural Change, Demographic Transition and Fertility Di erence T. Terry Cheung February 14, 2017 T. Terry Cheung () Structural Change and Fertility February 14, 2017 1 / 35 Question Question: The force
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 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 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 informationMultinational Production and Comparative Advantage
Multinational Production and Comparative Advantage Vanessa Alviarez Sauder Business School University of British Columbia February, 2015 Multinational Production (MP) and Sectoral Productivity Question:
More informationA Two-Country Case: Eaton-Kortum Model with General Equilibrium Technology Changes and International Trade
A Two-Country Case: Eaton-Kortum Model with General Equilibrium Technology Changes and International Trade Jia Zhao Master thesis for the Master of Philosophy in Economics degree UNIVERSITY OF OSLO May
More informationUniversal Gravity * Costas Arkolakis Yale and NBER. First Version: August 2014 This Version: April Abstract
Universal Gravity * Treb Allen Dartmouth and NBER Costas Arkolakis Yale and NBER Yuta Takahashi Northwestern First Version: August 2014 This Version: April 2017 Abstract This paper studies the theoretical
More informationThe TransPacific agreement A good thing for VietNam?
The TransPacific agreement A good thing for VietNam? Jean Louis Brillet, France For presentation at the LINK 2014 Conference New York, 22nd 24th October, 2014 Advertisement!!! The model uses EViews The
More informationCommuting, Migration and Local Employment Elasticities
Commuting, Migration and Local Employment Elasticities Ferdinando Monte Georgetown University Stephen J. Redding Princeton University Esteban Rossi-Hansberg Princeton University April 24, 2015 Abstract
More informationLecture 2: Factor Proportions Theory of Trade
Lecture 2: Factor Proportions Theory of Trade Alfonso A. Irarrazabal University of Oslo September 25, 2007 Contents 1 Factor Proportions Model 2 1.1 Preferences................................. 2 1.2 Technologies.................................
More informationMotivation Non-linear Rational Expectations The Permanent Income Hypothesis The Log of Gravity Non-linear IV Estimation Summary.
Econometrics I Department of Economics Universidad Carlos III de Madrid Master in Industrial Economics and Markets Outline Motivation 1 Motivation 2 3 4 5 Motivation Hansen's contributions GMM was developed
More informationDemand Shocks, Monetary Policy, and the Optimal Use of Dispersed Information
Demand Shocks, Monetary Policy, and the Optimal Use of Dispersed Information Guido Lorenzoni (MIT) WEL-MIT-Central Banks, December 2006 Motivation Central bank observes an increase in spending Is it driven
More informationElasticity of Trade Flow to Trade Barriers
Alessandro Olper Valentina Raimondi Elasticity of Trade Flow to Trade Barriers A Comparison among Emerging Estimation Techniques ARACNE Copyright MMVIII ARACNE editrice S.r.l. www.aracneeditrice.it info@aracneeditrice.it
More informationBeyond CES: Three Alternative Classes of Flexible Homothetic Demand Systems
Beyond CES: Three Alternative Classes of Flexible Homothetic Demand Systems Kiminori Matsuyama 1 Philip Ushchev 2 October 2017 1 Department of Economics, Northwestern University, Evanston, USA. Email:
More informationPractice Questions for Mid-Term I. Question 1: Consider the Cobb-Douglas production function in intensive form:
Practice Questions for Mid-Term I Question 1: Consider the Cobb-Douglas production function in intensive form: y f(k) = k α ; α (0, 1) (1) where y and k are output per worker and capital per worker respectively.
More information1 Differentiated Products: Motivation
1 Differentiated Products: Motivation Let us generalise the problem of differentiated products. Let there now be N firms producing one differentiated product each. If we start with the usual demand function
More informationAdvanced Macroeconomics
Advanced Macroeconomics The Ramsey Model Marcin Kolasa Warsaw School of Economics Marcin Kolasa (WSE) Ad. Macro - Ramsey model 1 / 30 Introduction Authors: Frank Ramsey (1928), David Cass (1965) and Tjalling
More informationBeyond CES: Three Alternative Classes of Flexible Homothetic Demand Systems
Beyond CES: Three Alternative Classes of Flexible Homothetic Demand Systems Kiminori Matsuyama 1 Philip Ushchev 2 December 19, 2017, Keio University December 20. 2017, University of Tokyo 1 Department
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 informationGranular Comparative Advantage
Granular Comparative Advantage Cecile Gaubert cecile.gaubert@berkeley.edu Oleg Itskhoki itskhoki@princeton.edu Stanford University March 2018 1 / 26 Exports are Granular Freund and Pierola (2015): Export
More information1 Overlapping Generations
1 Overlapping Generations 1.1 Motivation So far: infinitely-lived consumer. Now, assume that people live finite lives. Purpose of lecture: Analyze a model which is of interest in its own right (and which
More informationGravity, Productivity and the Pattern of Production and Trade
Gravity, Productivity and the Pattern of Production and Trade James E. Anderson Boston College and NBER January 6, 2009 Abstract The aggregated incidence of bilateral trade costs is derived from the gravity
More informationNBER WORKING PAPER SERIES COMMUTING, MIGRATION AND LOCAL EMPLOYMENT ELASTICITIES. Ferdinando Monte Stephen J. Redding Esteban Rossi-Hansberg
NBER WORKING PAPER SERIES COMMUTING, MIGRATION AND LOCAL EMPLOYMENT ELASTICITIES Ferdinando Monte Stephen J. Redding Esteban Rossi-Hansberg Working Paper 21706 http://www.nber.org/papers/w21706 NATIONAL
More informationClarendon Lectures, Lecture 1 Directed Technical Change: Importance, Issues and Approaches
Clarendon Lectures, Lecture 1 Directed Technical Change: Importance, Issues and Approaches Daron Acemoglu October 22, 2007 Introduction New technologies not neutral towards different factors/groups. 1.
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 informationModelling Methods for Trade Policy II: Introduction to OLS Regression Analysis
Modelling Methods for Trade Policy II: Introduction to OLS Regression Analysis Roberta Piermartini Economic Research and Analysis Division WTO Bangkok, 19 April 2006 Outline A. What is an OLS regression?
More informationDoes Pleasing Export-Oriented Foreign Investors Help Your. Balance of Payments? A General Equilibrium Analysis. (Available on Request Appendix)
Does Pleasing Export-Oriented Foreign Investors Help Your Balance of Payments? A General Equilibrium Analysis (Available on Request Appendix) Derivation of the Excess Demand Equations, the IS Equation,
More informationStructural Properties of Utility Functions Walrasian Demand
Structural Properties of Utility Functions Walrasian Demand Econ 2100 Fall 2017 Lecture 4, September 7 Outline 1 Structural Properties of Utility Functions 1 Local Non Satiation 2 Convexity 3 Quasi-linearity
More informationOn the Distributive Effects of Terms of Trade Shocks: The Role of Non-tradable Goods
WP/10/241 On the Distributive Effects of Terms of Trade Shocks: The Role of Non-tradable Goods Sebastian Galiani, Daniel Heymann and Nicolas Magud 2010 International Monetary Fund WP/10/241 IMF Working
More information