ECO2704 Lecture Notes: Melitz Model
|
|
- Felicia Franklin
- 6 years ago
- Views:
Transcription
1 ECO2704 Lecture Notes: Melitz Model Xiaodong Zhu University of Toronto October 15, / 22
2 Dynamic Industry Model with heterogeneous firms where opening to trade leads to reallocations of resources within an industry Opening to trade leads to Reallocations of resources across firms Low productivity firms exit High productivity firms expand so there is a change in industry composition High productivity firms enter export markets Improvements in aggregate industry productivity No change in firm productivity Consistent with empirical evidence from trade liberalizations? 2 / 22
3 The theoretical model is consistent with a variety of other stylized facts about industries Heterogeneous firm productivity Ongoing entry and exit Co-movement in (gross) entry and exit due to sunk entry costs Exiting firms are low productivity (selection effect) Explains why some firms export within industries and others do not Contrast with traditional theories of comparative advantage Exporting firms are high productivity (selection effect) No feedback from exporting to productivity 3 / 22
4 Single factor: labor, numeraire, wage normalized to 1 Firms enter market by paying sunk entry cost (f e ) Firms observe their productivity (ϕ) from distribution G(ϕ) Productivity is fixed thereafter Once productivity is observed, firms decide whether to produce or exit Firms produce horizontally-dierentiated varieties, with a fixed production cost (f d ) and a variable cost that depends on their productivity Firms face an exogenous probability of death (δ) per period due to force majeure events 4 / 22
5 Preferences and demand [ˆ ] σ Q = q(k) σ 1 σ 1 σ dk,σ > 1 k Ω Let R be the total expenditures of the representative consumer. Then, ( ) p(k) σ q(k) = Q P ( ) p(k) 1 σ r(k) = p(k)q(k) = R P Here p(k) is the price of variety k and P is the price index faced by the consumer, [ˆ ] 1 P = p(k) 1 σ 1 σ dk k Ω 5 / 22
6 Technology The amount of labour needed for a firm to produce q(k) units of variety k is f d + q(k)/ϕ(k) So the total cost of production is and the marginal cost is f d + q(k)/ϕ(k) 1/ϕ(k) All firms with the same productivity behave in exactly the same way. So we will use productivity ϕ rather than variety k to identify a firm. 6 / 22
7 Profit maximization Each firm produces a differentiated variety (monopolistic competition): π(ϕ) = max q(ϕ) {p(ϕ)q(ϕ) f d + q(ϕ)/ϕ} Constant markup pricing: which implies the following: p(ϕ) = σ σ 1 ϕ 1 = (ρϕ) 1 (1) r(ϕ) = ( ϕ) σ 1 P σ 1 R, q(ϕ) = [ ϕ] σ P σ 1 R (2) π(ϕ) = r(ϕ) σ f d (3) 7 / 22
8 Entry and exit Prior to entry, a firm incurs a sunk cost of entry, f e. Upon entry, it draws a productivity ϕ randomly from a distribution G(.). The firm will stay in the market only if Current value of firm ϕ is v(ϕ) = t=0 π(ϕ) 0 or r(ϕ) σf d { } π(ϕ) (1 δ) t max{π(ϕ),0} = max,0 δ Let ϕ be the cutoff productivity such that π(ϕ ) = 0 and p in (ϕ ) = 1 G(ϕ ) the probability that a firm will stay. Then, productivity distribution of producing firms is given by the following density function: µ(ϕ) = { g(ϕ) p in (ϕ ) ifϕ ϕ 0 otherwise (4) 8 / 22
9 Equilibrium in a closed economy A stationary equilibrium is a vector (ϕ, M, M e, P, R) of cutoff productivity, mass of producing firms, mass of entrants, price level and aggregate expenditures such that price, revenue, quantity and profit for each firm ϕ are given by equation (1) to (3), the distribution of producing firms is given by µ(ϕ) in equation (4), and the following conditions hold: Zero profit condition: π(ϕ ) = 0 Free entry condition: ˆ π(ϕ) p in (ϕ ) µ(ϕ)dϕ = f e δ Stationarity condition: Market clearing condition: p in (ϕ )M e = δm R = L 9 / 22
10 Price index [ˆ P = P = M 1/(1 σ) ρ 1 [ˆ ] 1 p(ϕ) 1 σ 1 σ µ(ϕ)mdϕ ] ϕ σ 1 µ(ϕ)dϕ = M 1/(1 σ) (ρϕ) 1 (5) Here [ˆ ϕ = ] 1 ϕ σ 1 σ 1 µ(ϕ)dϕ is a weighted average of firm productivities. 10 / 22
11 Profit function and entrants expected value From (2), (3), (5) and the market clearing condition: π(ϕ) = ( ) ϕ σ 1 L ϕ σm f d Entrants expected value: ˆ π(ϕ) v = p in (ϕ ) µ(ϕ)dϕ = p in (ϕ ) π(ϕ) δ δ = p in(ϕ ) δ [ ] L σm f d 11 / 22
12 Mass of producing firms Zero profit condition= Free entry condition = Thus, ( ϕ ϕ p in (ϕ ) δ ) σ 1 L σm = f d [ ] L σm f d = f e (6) [ (ϕ ) 1 σ 1] f d = δf e ϕ p in (ϕ ) 12 / 22
13 Cutoff productivity in equilibrium [ (ϕ ) 1 σ 1] f d = δf e ϕ p in (ϕ ) ˆ [ ( ) ϕ σ 1 = H(ϕ ) ϕ 1] g(ϕ)dϕ = δf e /f d (7) ϕ LHS is a decreasing function, so ϕ increases in fixed production cost f d, but decreases in entry cost f e 13 / 22
14 Number of firms in equilibrium From equation (6), M = L σ[f d +δf e /p in (ϕ )] 14 / 22
15 Size distribution in equilibrium Firm ϕ employs z(ϕ) =q(ϕ)/ϕ number of worker for production ( ) p(ϕ) σ ( ) ϕ σ 1 z(ϕ) = Q/ϕ = σρf d P ϕ Thus, the average firm size is z = σρf d ( ϕ ϕ ) σ 1 = σρ[f d +δf e /p in (ϕ )] 15 / 22
16 Properties of Closed Economy Equilibrium Increasing fixed production cost f d will raise average productivity raise average firm size but lower the number of producing firms Increasing sunk entry cost f e will lower average productivity lower average firm size and lower the number of producing firms 16 / 22
17 n + 1 identical countries, so identical wage, price level and income across countries wage is normalized to 1 To produce, a firm will first incur a fixed production cost f d If the firm decides to export, it will also incur a fixed export cost f x Iceberg trade cost τ 17 / 22
18 Trade costs Same markup pricing for exports: Revenue functions: p x (ϕ) = τ ϕ = τp d(ϕ) Profit functions: r d (ϕ) = ( ϕ) σ 1 P σ 1 R π d (ϕ) = r d(ϕ) σ f d r x (ϕ) = τ 1 σ r d (ϕ) π x (ϕ) = r x(ϕ) σ f x π(ϕ) = π d (ϕ)+nπ x (ϕ) 18 / 22
19 Cutoff productivities The cutoff productivity below which a firm will now produce: ϕ d π d (ϕ d ) = 0 Nominal income remains the same as in closed economy: R = L Price level is lower than that in the closed economy = π d (ϕ) < π a (ϕ) = ϕ a < ϕ d Trade increases competition and forces some inefficient firms to exit The cutoff productivity for exporting: max { ϕ } d,ϕ x π x (ϕ x) = 0 If τ σ 1 f x > f d, then ϕ d < ϕ x : not all producing firms export, and exporting firms are more productive 19 / 22
20 Open economy results The opening of trade leads to: Rise in the zero profit cutoff productivity Rise in average firm revenue and profit Low productivity firms between ϕ a and ϕ d exit Intermediate productivity firms betwen ϕ d and ϕ x contract Only firms with productivities greater than ϕ x enter export markets and expand All of the above lead to a change in industry composition that raises aggregate industry productivity 20 / 22
21 Subsequent literature Helpman, Melitz and Rubinstein (2004) Export Versus FDI with Heterogeneous Firms," American Economic Review, 94, Introduces both exports and FDI as alternative means of serving a foreign market Introduces an outside sector to tractably characterize equilibrium with many asymmetric sectors Antras and Helpman (2004) Global Sourcing," Journal of Political Economy, 112(3), Combines the Melitz model with the Antras (2003) model of incomplete contracts and trade Bernard, Redding and Schott (2007) Comparative Advantage and Heterogeneous Firms," Review of Economic Studies, 73(1), Incorporates the Melitz model into the framework of integrated equilibrium of Helpman and Krugman (1985) 21 / 22
22 Subsequent literature Chaney, Thomas (2008) Distorted Gravity: the Intensive and Extensive Margins of International Trade," American Economic Review, September. Provides a simplified static version of the Melitz model without ongoing firm entry and with an outside sector Examines the model s implications for the extensive and intensive margins of international trade Arkolakis, Costas, Klenow, Peter, Demidova, Svetlana and Andres Rodriguez-Clare (2009) The Gains from Trade with Endogenous Variety," American Economic Review, Papers and Proceedings, 98 (4), Solves the Chaney version of the model without an outside sector Derives a sufficient statistic for welfare of the same form as that in Eaton and Kortum (2002) 22 / 22
Firms in International Trade. Lecture 2: The Melitz Model
Firms in International Trade Lecture 2: The Melitz Model Stephen Redding London School of Economics 1 / 33 Essential Reading Melitz, M. J. (2003) The Impact of Trade on Intra-Industry Reallocations and
More informationHeterogeneous Firms. Notes for Graduate Trade Course. J. Peter Neary. University of Oxford. January 30, 2013
Heterogeneous Firms Notes for Graduate Trade Course J. Peter Neary University of Oxford January 30, 2013 J.P. Neary (University of Oxford) Heterogeneous Firms January 30, 2013 1 / 29 Plan of Lectures 1
More informationTrade and the Environment with Heterogeneous Firms
Trade and the Environment with Heterogeneous Firms Claustre Bajona Ryerson University Paul Missios Ryerson University Andrea Pierce Industry Canada VERY PRELIMINARY AND INCOMPLETE. Please do not quote
More informationTHE IMPACT OF TRADE ON INTRA-INDUSTRY REALLOCATIONS AND AGGREGATE INDUSTRY PRODUCTIVITY
Econometrica, Vol. 71, No. 6 (November, 2003), 1695 1725 THE IMPACT OF TRADE ON INTRA-INDUSTRY REALLOCATIONS AND AGGREGATE INDUSTRY PRODUCTIVITY BY MARC J. MELITZ 1 This paper develops a dynamic industry
More informationImpact of Tariff under Hecksher-Ohlin Comparative Advantage Setting and Firm Heterogeneity
Impact of Tariff under Hecksher-Ohlin Comparative Advantage Setting and Firm Heterogeneity ERASMUS UNIVERSITY ROTTERDAM Erasmus School of Economics Department of Economics Supervisor: Dr. J. Emami Namini
More informationInternational Trade Lecture 14: Firm Heterogeneity Theory (I) Melitz (2003)
14.581 International Trade Lecture 14: Firm Heterogeneity Theory (I) Melitz (2003) 14.581 Week 8 Spring 2013 14.581 (Week 8) Melitz (2003) Spring 2013 1 / 42 Firm-Level Heterogeneity and Trade What s wrong
More informationTrade Costs and Job Flows: Evidence from Establishment-Level Data
Trade Costs and Job Flows: Evidence from Establishment-Level Data Appendix For Online Publication Jose L. Groizard, Priya Ranjan, and Antonio Rodriguez-Lopez March 2014 A A Model of Input Trade and Firm-Level
More informationInternational Economics B 9. Monopolistic competition and international trade: Firm Heterogeneity
.. International Economics B 9. Monopolistic competition and international trade: Firm Heterogeneity Akihiko Yanase (Graduate School of Economics) January 13, 2017 1 / 28 Introduction Krugman (1979, 1980)
More informationMelitz Model: Heterogenous Firm Model of Trade
Melitz Model: Heterogenous Firm Model of Trade Seyed Ali Madanizadeh Sharif U. of Tech. May 7, 2014 Seyed Ali Madanizadeh (Sharif U. of Tech.) Melitz Model: Heterogenous Firm Model of Trade May 7, 2014
More informationLecture 3: International trade under imperfect competition
Lecture 3: International trade under imperfect competition Agnès Bénassy-Quéré (agnes.benassy@cepii.fr) Isabelle Méjean (isabelle.mejean@polytechnique.edu) www.isabellemejean.com Eco 572, International
More informationPrices and Exchange Rates: A Theory of Disconnect
Prices and Exchange Rates: A Theory of Disconnect Jose Antonio Rodriguez Lopez Department of Economics University of California, Irvine First Version: July 2008 Revised: May 2010 Abstract I present a sticky-wage
More informationProductivity, Fair Wage and Offshoring Domestic Jobs
Productivity, Fair Wage and Offshoring Domestic Jobs Xi Chen July 7, 2017 Preliminary draft Abstract This paper develops a general equilibrium model with monopolistic competition that incorporates: (i)
More informationPrice Discrimination and Trade in Intermediate Goods (Preliminary Draft)
Price Discrimination and Trade in Intermediate Goods (Preliminary Draft) Anna Ignatenko March 3, 2018 Abstract In this paper, I document the existence of price discrimination in firm-to-firm cross-border
More informationInnovation, Firm Dynamics, and International Trade
Innovation, Firm Dynamics, and International Trade Andrew Atkeson, UCLA and Minneapolis Fed Ariel Burstein, UCLA November 10, 2009 tkeson and Burstein ()Innovation, dynamics, international trade November
More informationIntroduction to New New Trade Theory
Introduction to New New Trade Theory Beverly Lapham October 2017 Traditional Theory: Country Level Analysis Assumes that average production cost is independent of output level. Gains from trade result
More informationLocation, Productivity, and Trade
May 10, 2010 Motivation Outline Motivation - Trade and Location Major issue in trade: How does trade liberalization affect competition? Competition has more than one dimension price competition similarity
More informationComputing General Equilibrium Theories of Monopolistic Competition and Heterogeneous Firms
Computing General Equilibrium Theories of Monopolistic Competition and Heterogeneous Firms Edward J. Balistreri Colorado School of Mines Thomas F. Rutherford ETH-Zürich March 2011 Draft Chapter for the
More informationTrade and Labor Market: Felbermayr, Prat, Schmerer (2011)
Trade and Labor Market: Felbermayr, Prat, Schmerer (2011) Davide Suverato 1 1 LMU University of Munich Topics in International Trade, 16 June 2015 Davide Suverato, LMU Trade and Labor Market: Felbermayr,
More informationEssays on International Trade, Productivity, and Growth. Leilei Shen
Essays on International Trade, Productivity, and Growth by Leilei Shen A thesis submitted in conformity with the requirements for the degree of Doctor of Philosophy Graduate Department of Economics University
More informationInternational Trade Gravity Model
International Trade Gravity Model Yiqing Xie School of Economics Fudan University Dec. 20, 2013 Yiqing Xie (Fudan University) Int l Trade - Gravity (Chaney and HMR) Dec. 20, 2013 1 / 23 Outline Chaney
More informationLecture 8: Heterogeneous Firms and the Decision to Export
Lecture 8: Heterogeneous Firms and the Decision to Export Gregory Corcos gregory.corcos@polytechnique.edu Isabelle Méjean isabelle.mejean@polytechnique.edu International Trade Université Paris-Saclay Master
More informationQuality, Variable Mark-Ups, and Welfare: A Quantitative General Equilibrium Analysis of Export Prices
Quality, Variable Mark-Ups, and Welfare: A Quantitative General Equilibrium Analysis of Export Prices Haichao Fan Amber Li Sichuang Xu Stephen Yeaple Fudan, HKUST, HKUST, Penn State and NBER May 2018 Mark-Ups
More informationAn asymmetric Melitz model of trade and growth
An asymmetric Melitz model of trade and growth Takumi Naito Waseda University October 15, 2015 Abstract To examine the effects of unilateral trade liberalization on growth and welfare of the liberalizing
More informationEcon 8401-T.Holmes. Lecture on Foreign Direct Investment. FDI is massive. As noted in Ramondo and Rodriquez-Clare, worldwide sales of multinationals
Econ 8401-T.Holmes Lecture on Foreign Direct Investment FDI is massive. As noted in Ramondo and Rodriquez-Clare, worldwide sales of multinationals is on the order of twice that of total world exports.
More informationIntroducing Firm Heterogeneity Theory into CGEBox
Introducing Firm Heterogeneity Theory into CGEBox Wolfgang Britz and Yaghoob Jafari Institute for Food and Resource Economics, University of Bonn, Germany Abstract Computable general equilibrium models
More informationDistribution Costs & The Size of Indian Manufacturing Establishments
Distribution Costs & The Size of Indian Manufacturing Establishments Alessandra Peter, Cian Ruane Stanford University November 3, 2017 Question Selling manufactured goods involves costs of distribution:
More informationClass Notes on Chaney (2008)
Class Notes on Chaney (2008) (With Krugman and Melitz along the Way) Econ 840-T.Holmes Model of Chaney AER (2008) As a first step, let s write down the elements of the Chaney model. asymmetric countries
More informationFactor price overshooting with trade liberalization: theory and evidence
Factor price overshooting with trade liberalization: theory and evidence Julian EMAMI NAMINI and Ricardo A. ÓPEZ February 15, 2012 Abstract We develop an intra industry trade model with human capital and
More informationA Theory on the Role of Wholesalers in International Trade Based on Economies of Scope
A Theory on the Role of Wholesalers in International Trade Based on Economies of Scope Anders Akerman January 5, 2014 (first version January, 2010) Abstract This paper offers an explanation for the existence
More informationDynamic Selection and the New Gains from Trade with. Heterogeneous Firms
Dynamic Selection and the New Gains from Trade with Heterogeneous Firms Thomas Sampson London School of Economics & CEP November 202 Abstract This paper develops an open economy growth model in which firm
More informationThe heterogeneous effects of trade facilitation: theory and evidence
The heterogeneous effects of trade facilitation: theory and evidence Shon Ferguson and Rikard Forslid September 2011, Work in progress Abstract The purpose of this study is to test what type of firms start
More informationRules of Origin and Firm Heterogeneity
Rules of Origin and Firm Heterogeneity Svetlana Demidova Pennsylvania State University Hiau Looi Kee World Bank Kala Krishna Pennsylvania State University and NBER This Version, November 2005 Abstract
More informationDiscussion Papers In Economics And Business
Discussion Papers In Economics And Business The Effect of Technology Choice on Specialization and Welfare in a Two-Country Model Yukiko Sawada Discussion Paper 15-10 Graduate School of Economics and Osaka
More informationThe Effect of Globalization in a Semi Endogenous Growth Model with Firm Heterogeneity, Endogenous International Spillover, and Trade
The Effect of Globalization in a Semi Endogenous Growth Model with Firm Heterogeneity, Endogenous International Spillover, and Trade Katsufumi Fukuda 1 August 3, 214 Abstract This paper shows that globalization
More informationA welfare ranking of multilateral reductions in real and tariff trade barriers when firms are heterogenous.
A welfare raning of multilateral reductions in real and tariff trade barriers when firms are heterogenous. Philipp J.H. Schröder Allan Sørensen August 0, 20 Abstract Trade liberalization comes about through
More informationEntry on Export Markets and Firm-Level Performance Growth: Intra-Industrial Convergence or Divergence?
Fondazione Eni Enrico Mattei Working Papers -7-20 Entry on Export Markets and Firm-Level Performance Growth: Intra-Industrial Convergence or Divergence? Florian Mayneris CORE, florian.mayneris@uclouvain.be
More informationFactor Price Overshooting with Trade Liberalization: Theory and Evidence
Factor Price Overshooting with Trade iberalization: Theory and Evidence Julian Emami Namini, Erasmus University Rotterdam Ricardo opez, Brandeis International Business chool Working Paper eries 212 52
More informationNBER WORKING PAPER SERIES ENDOGENOUS VARIETY AND THE GAINS FROM TRADE. Costas Arkolakis Svetlana Demidova Peter J. Klenow Andrés Rodríguez-Clare
NBER WORKING PAPER SERIES ENDOGENOUS VARIETY AND THE GAINS FROM TRADE Costas Arkolakis Svetlana Demidova Peter J. Klenow Andrés Rodríguez-Clare Working Paper 3933 http://www.nber.org/papers/w3933 NATIONAL
More informationPhD Topics in Macroeconomics
PhD Topics in Macroeconomics Lecture 5: heterogeneous firms and trade, part three Chris Edmond 2nd Semester 204 This lecture Chaney (2008) on intensive and extensive margins of trade - Open economy model,
More informationThomas Sampson Dynamic selection: an idea flows theory of entry, trade and growth
Thomas Sampson Dynamic selection: an idea flows theory of entry, trade and growth Article (Accepted version) (Refereed) Original citation: Sampson, Thomas (2016) Dynamic selection: an idea flows theory
More informationInternational Development and Firm Distribution
International Development and Firm Distribution Ping Wang Department of Economics Washington University in St. Louis February 2016 1 A. Introduction Conventional macroeconomic models employ aggregate production
More informationA Model of Trade with Ricardian Comparative Advantage and Intra-sectoral Firm Heterogeneity
A Model of Trade with Ricardian Comparative Advantage and Intra-sectoral Firm Heterogeneity Haichao FAN Edwin L.-C. LAI Han QI December 24, 20 Abstract In this paper, we merge the heterogenous firm trade
More informationGlobal Production with Export Platforms
Global Production with Export Platforms Felix Tintelnot University of Chicago and Princeton University (IES) ECO 552 February 19, 2014 Standard trade models Most trade models you have seen fix the location
More informationEffects on the cross-country difference in the minimum. wage on international trade, growth and unemployment
Effects on the cross-country difference in the minimum wage on international trade, growth and unemployment Chihiro Inaba Department of Economics, Kobe University Katsufumi Fukuda Hiroshima University
More informationNOT FOR PUBLICATION. Theory Appendix for The China Syndrome. Small Open Economy Model
NOT FOR PUBLICATION Theory Appendix for The China Syndrome Small Open Economy Model In this appendix, we develop a general equilibrium model of how increased import competition from China affects employment
More informationThree Essays on International Trade and Institutions
Three Essays on International Trade and Institutions by Ihab F. Saad A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy (Political Science and Economics)
More informationTrade and Technology Asian Miracles and WTO Anti-Miracles
Trade and Technology Asian Miracles and WTO Anti-Miracles Guillermo Ordoñez UCLA March 6, 2007 Motivation Trade is considered an important source of technology diffusion...but trade also shapes the incentives
More informationMelitz meets Pissarides: Firm heterogeneity, search unemployment and trade liberalization
Melitz meets Pissarides: Firm heterogeneity, search unemployment and trade liberalization Gabriel Felbermayr, Julien Prat, and Hans-Jörg Schmerer PRELIMINARY VERSION April 2007 Abstract Motivated by strong
More information"Gains from Intra-Firm Trade and Multinational Production"
Thema Working Paper n 2014-14 Université de Cergy Pontoise, France "Gains from Intra-Firm Trade and Multinational Production" Pamela Bombarda Stefania Marcassa July, 2014 Gains from Intra-Firm Trade and
More informationHow Local Financial Market Conditions, Interest Rates, and Productivity Relate to Decisions to Export *
ANNALS OF ECONOMICS AND FINANCE 16-2, 315 334 (2015) How Local Financial Market Conditions, Interest Rates, and Productivity Relate to Decisions to Export * Dingming Liu Wang Yanan Institute for Studies
More informationStructural Estimation and Solution of International Trade Models with Heterogeneous Firms
Structural Estimation and Solution of International Trade Models with Heterogeneous Firms Edward J. Balistreri Colorado School of Mines Russell H. Hillberry University of Melbourne October 2007 Thomas
More informationTariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades
Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades Lorenzo Caliendo Yale University and NBER Robert C. Feenstra UC Davis and NBER John Romalis University of Sydney and
More informationModel and Numerical Solutions. This appendix provides further detail about our model and numerical solutions as well as additional empirical results.
Online Appendix for Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters (Amit K. Khandelwal, Peter K. Schott and Shang-Jin Wei) This appendix provides further detail
More informationLabor Market Rigidities, Trade and Unemployment
Labor Market Rigidities, Trade and Unemployment Elhanan Helpman Harvard and CIFAR Oleg Itskhoki Princeton Chicago Booth May 2011 1 / 30 Motivation Institutional differences as a source of comparative advantage
More informationWORKING PAPER NO ESTABLISHMENT HETEROGENEITY, EXPORTER DYNAMICS, AND THE EFFECTS OF TRADE LIBERALIZATION
WORKING PAPER NO. 11-19 ESTABLISHMENT HETEROGENEITY, EXPORTER DYNAMICS, AND THE EFFECTS OF TRADE LIBERALIZATION George Alessandria Federal Reserve Bank of Philadelphia Horag Choi Monash University April
More informationLiquidity and the International Allocation of Economic Activity
Liquidity and the International Allocation of Economic Activity Antonio Rodriguez-Lopez University of California, Irvine July 2018 Abstract This paper introduces a framework to study the linkages between
More informationProductivity: Theory and Evidence
Agency Problem, Trade Liberalization and Aggregate Productivity: Theory and Evidence Cheng Chen University of Hong Kong and Boston University Abstract Evidence shows that trade liberalization mitigates
More informationEconomics 689 Texas A&M University
Horizontal FDI Economics 689 Texas A&M University Horizontal FDI Foreign direct investments are investments in which a firm acquires a controlling interest in a foreign firm. called portfolio investments
More informationNBER WORKING PAPER SERIES SKILL BIASED HETEROGENEOUS FIRMS, TRADE LIBERALIZATION, AND THE SKILL PREMIUM. James Harrigan Ariell Reshef
NBER WORKING PAPER SERIES SKILL BIASED HETEROGENEOUS FIRMS, TRADE LIBERALIZATION, AND THE SKILL PREMIUM James Harrigan Ariell Reshef Working Paper 1764 http://www.nber.org/papers/w1764 NATIONAL BUREAU
More informationDEPARTMENT OF ECONOMICS WORKING PAPER SERIES. Firm Heterogeneity, Trade, and Wage Inequality. Bulent Unel Louisiana State University
DEPARTMENT OF ECONOMICS WORKING PAPER SERIES Firm Heterogeneity, Trade, and Wage Inequality Bulent Unel Louisiana State University Working Paper 2008-02 Revised May 2009 http://bus.lsu.edu/mcmillin/working_papers/pap08_02.pdf
More informationCredit Constraints, Technology Choice and Exports - A Firm Level Study for Latin American Countries
Credit Constraints, Technology Choice and Exports - A Firm Level Study for Latin American Countries December 17, 2013 Research Motivation Trade liberalization benefits are not fully realized by firms in
More informationDynamic Selection and the New Gains from Trade with. Heterogeneous Firms
Dynamic Selection and the New Gains from Trade with Heterogeneous Firms Thomas Sampson London School of Economics & CEP March 2013 Abstract This paper develops an open economy growth model in which firm
More informationEndogenous Variety and the Gains from Trade
Endogenous Variety and the Gains from Trade Costas Arkolakis, Yale University Svetlana Demidova, University of Georgia Peter J. Klenow, Stanford University and NBER Andrés Rodríguez-Clare, Penn State University
More informationProductivity, Quality and Exporting Behavior under Minimum Quality Requirements
Productivity, Quality and Exporting Behavior under Minimum Quality Requirements Juan Carlos Hallak and Jagadeesh Sivadasan University of Michigan May 2006 Very Preliminary and Incomplete Abstract We develop
More informationInternational Trade, Monopolistic Competition and Gravity
International Trade, Monopolistic Competition and Gravity Dennis Novy Spring Term 2015 EC9B3 Topics in Macroeconomics and International Trade We will cover two main topics. (1) Monopolistic Competition
More informationDynamic Selection: An Idea Flows Theory of Entry, Trade and Growth
Dynamic Selection: An Idea Flows Theory of Entry, Trade and Growth Thomas Sampson London School of Economics June 2014 Abstract This paper develops an idea flows theory of trade and growth with heterogeneous
More informationRenegotiation of Trade Agreements and Firm Exporting Decisions: Evidence from the Impact of Brexit on UK Exports
Renegotiation of Trade Agreements and Firm Exporting Decisions: Evidence from the Impact of Brexit on UK Exports Meredith A. Crowley Oliver Exton Lu Han University of Cambridge July 2018 Disclaimer This
More informationEntry, Trade Costs and International Business Cycles
Entry, Trade Costs and International Business Cycles Roberto Fattal and Jose Lopez UCLA SED Meetings July 10th 2010 Entry, Trade Costs and International Business Cycles SED Meetings July 10th 2010 1 /
More informationOptimal Redistribution in an Open Economy
Optimal Redistribution in an Open Economy Oleg Itskhoki Harvard University Princeton University January 8, 2008 1 / 29 How should society respond to increasing inequality? 2 / 29 How should society respond
More informationNBER WORKING PAPER SERIES TARIFF REDUCTIONS, ENTRY, AND WELFARE: THEORY AND EVIDENCE FOR THE LAST TWO DECADES
NBER WORKING PAPER SERIES TARIFF REDUCTIONS, ENTRY, AND WELFARE: THEORY AND EVIDENCE FOR THE LAST TWO DECADES Lorenzo Caliendo Robert C. Feenstra John Romalis Alan M. Taylor Working Paper 21768 http://www.nber.org/papers/w21768
More informationGAINS FROM TRADE IN NEW TRADE MODELS
GAINS FROM TRADE IN NEW TRADE MODELS Bielefeld University phemelo.tamasiga@uni-bielefeld.de 01-July-2013 Agenda 1 Motivation 2 3 4 5 6 Motivation Samuelson (1939);there are gains from trade, consequently
More informationTrade Theory with Numbers: Quantifying the Welfare Consequences of Globalization
Trade Theory with Numbers: Quantifying the Welfare Consequences of Globalization Andrés Rodríguez-Clare (UC Berkeley and NBER) September 29, 2012 The Armington Model The Armington Model CES preferences:
More informationTaxing Firms Facing Financial Frictions
Taxing Firms Facing Financial Frictions Daniel Wills 1 Gustavo Camilo 2 1 Universidad de los Andes 2 Cornerstone November 11, 2017 NTA 2017 Conference Corporate income is often taxed at different sources
More informationUNIVERSITY OF NOTTINGHAM. Discussion Papers in Economics
UNIVERSITY OF NOTTINGHAM Discussion Papers in Economics Discussion Paper No. 07/05 Firm heterogeneity, foreign direct investment and the hostcountry welfare: Trade costs vs. cheap labor By Arijit Mukherjee
More informationForeign Direct Investment I
FD Foreign Direct nvestment [My notes are in beta. f you see something that doesn t look right, would greatly appreciate a heads-up.] 1 FD background Foreign direct investment FD) occurs when an enterprise
More informationLecture 14. Multinational Firms. 2. Dunning's OLI, joint inputs, firm versus plant-level scale economies
Lecture 14 Multinational Firms 1. Review of empirical evidence 2. Dunning's OLI, joint inputs, firm versus plant-level scale economies 3. A model with endogenous multinationals 4. Pattern of trade in goods
More informationSkill biased heterogeneous firms, trade liberalization, and the skill premium
Skill biased heterogeneous firms, trade liberalization, and the skill premium James Harrigan University of Virginia and NBER and Ariell Reshef University of Virginia Version: November, 211 1 We propose
More informationTrade Intermediation and the Organization of Exporters
Trade Intermediation and the Organization of Exporters by Gabriel Felbermayr and Benjamin Jung Nr.309/2009 ISSN 0930-8334 Trade Intermediation and the Organization of Exporters Gabriel J. Felbermayr and
More informationLecture Notes on the Empirical and Quantitative Methods in International Trade
Lecture Notes on the Empirical and Quantitative Methods in International Trade Xin Tang 1 Department of World Economics Economics and Management School at Wuhan University November 2, 2015 1 The author
More informationDivision of Economics and Business Working Paper Series. Carbon policy and the structure of global trade
Division of Economics and Business Working Paper Series Carbon policy and the structure of global trade Edward J. Balistreri Christoph Böhringer Thomas F. Rutherford Working Paper 2015-02 http://econbus.mines.edu/working-papers/wp201502.pdf
More informationESSAYS ON TRADE LIBERALIZATION WITH FIRM HETEROGENEITY. Aleksandr Vashchilko. Dissertation. Submitted to the faculty of the
ESSAYS ON TRADE LIBERALIZATION WITH FIRM HETEROGENEITY By Aleksandr Vashchilko Dissertation Submitted to the faculty of the Graduate School of Vanderbilt University in partial ful llment of the requirements
More informationNBER WORKING PAPER SERIES INTERNATIONAL WELFARE AND EMPLOYMENT LINKAGES ARISING FROM MINIMUM WAGES. Hartmut Egger Peter Egger James R.
NBER WORKING PAPER SERIES INTERNATIONAL WELFARE AND EMPLOYMENT LINKAGES ARISING FROM MINIMUM WAGES Hartmut Egger Peter Egger James R. Markusen Working Paper 15196 http://www.nber.org/papers/w15196 NATIONAL
More informationGravity, Distance, and International Trade
Gravity, Distance, and International Trade Scott L. Baier Amanda Kerr Yoto V. Yotov CESIFO WORKING PAPER NO. 6357 CATEGORY 8: TRADE POLICY FEBRUARY 2017 An electronic version of the paper may be downloaded
More informationTrade liberalisation, heterogeneous firms and endogenous investment PRELIMINARY DRAFT
Trade liberalisation, heterogeneous firms and endogenous investment Gonzague Vannoorenberghe University of Mannheim 05/05/2008 PRELIMINARY DRAFT Abstract This paper develops a Melitz (2003) type model
More informationThe E ciency Comparison of Taxes under Monopolistic Competition with Heterogenous Firms and Variable Markups
The E ciency Comparison of Taxes under Monopolistic Competition with Heterogenous Firms and Variable Markups November 9, 23 Abstract This paper compares the e ciency implications of aggregate output equivalent
More informationThe Extensive Margin of Trade and Monetary Policy
The Extensive Margin of Trade and Monetary Policy Yuko Imura Bank of Canada Malik Shukayev University of Alberta June 2, 216 The views expressed in this presentation are our own, and do not represent those
More informationWelfare and Trade Without Pareto
Welfare and Trade Without By KEITH HEAD, THIERRY MAYER AND MATHIAS THOENIG Heterogeneous firm papers that need parametric distributions most of the literature following Melitz (2003) use the distribution.
More informationReallocation Effects in the Specific Factors and Heckscher-Ohlin. Models under Firm Heterogeneity
Reallocation Effects in the Specific Factors and Heckscher-Ohlin Models under Firm Heterogeneity Eddy Bekkers Johannes Kepler University Linz Robert Stehrer The Vienna Institute for International Economic
More informationExtensive and Intensive Margins of Export and FDI: the Role of Wages
Extensive and Intensive Margins of Export and FDI: the Role of Wages Pamela Bombarda THEMA - Université de Cergy-Pontoise 15 March 2013 Abstract Multinational and exporting firms play a key role in trade
More informationLecture 3: New Trade Theory
Lecture 3: New Trade Theory Isabelle Méjean isabelle.mejean@polytechnique.edu http://mejean.isabelle.googlepages.com/ Master Economics and Public Policy, International Macroeconomics October 30 th, 2008
More informationProximity vs Comparative Advantage: A Quantitative Theory of Trade and Multinational Production
Proximity vs Comparative Advantage: A Quantitative Theory of Trade and Multinational Production Costas Arkolakis, Natalia Ramondo, Andres Rodriguez-Clare, Stephen Yeaple June 2011 Motivation WSJ (April
More informationTax Policies in Open Economies
Tax Policies in Open Economies by Rishi R. Sharma A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy (Economics) in the University of Michigan 2016
More informationDistorted Trade Barriers: A Dissection of Trade Costs in a Distorted Gravity Model
Distorted Trade Barriers: A Dissection of Trade Costs in a Distorted Gravity Model Tibor Besedeš Georgia Institute of Technology Matthew T. Cole California Polytechnic State University August 17, 2016
More informationPublic Sector Growth: The Role of Globalization
Public Sector Growth: The Role of Globalization Josef Falkinger University of Zurich CESifo, Munich; IZA, Bonn Sandra Hanslin University of Zurich August 2010 Abstract This paper analyzes the effect of
More informationOffshoring and Labor Share in Manufacturing Industries in Developed Countries
JOB MARKET PAPER Offshoring and Labor Share in Manufacturing Industries in Developed Countries Ilhyun Cho University of California, Davis November 28, 2016 Abstract This paper studies the effect of offshoring
More informationSkill biased heterogeneous firms, trade liberalization, and the skill premium
Skill biased heterogeneous firms, trade liberalization, and the skill premium James Harrigan University of Virginia and NBER and Ariell Reshef University of Virginia Version: May, 212 1 We propose a theory
More informationTrade, Firms, and Wages: Theory and Evidence * Mary Amiti Federal Reserve Bank of New York and CEPR. Donald R. Davis Columbia University and NBER
Trade, Firms, and Wages: Theory and Evidence * Mary Amiti Federal Reserve Bank of New York and CEPR Donald R. Davis Columbia University and NBER This Draft: 4 March, 2011 Abstract: How does trade liberalization
More informationComparison of Welfare Gains in the Armington, Krugman and Melitz Models
Policy Research Working Paper 8570 WPS8570 Comparison of Welfare Gains in the Armington, Krugman and Melitz Models Insights from a Structural Gravity Approach Edward J. Balistreri David G. Tarr Public
More informationGT CREST-LMA. Pricing-to-Market, Trade Costs, and International Relative Prices
: Pricing-to-Market, Trade Costs, and International Relative Prices (2008, AER) December 5 th, 2008 Empirical motivation US PPI-based RER is highly volatile Under PPP, this should induce a high volatility
More informationEndogenous Trade Participation with Incomplete Exchange Rate Pass-Through
Endogenous Trade Participation with Incomplete Exchange Rate Pass-Through Yuko Imura Bank of Canada June 28, 23 Disclaimer The views expressed in this presentation, or in my remarks, are my own, and do
More information