A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.
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Results 10 resources
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We show that endogenous firm selection provides a new welfare margin for heterogeneous firm models of trade (relative to homogeneous firm models). Under some parameter restrictions, the trade elasticity is constant and is a sufficient statistic for welfare, along with the domestic trade share. However, even small deviations from these restrictions imply that trade elasticities are variable and differ across markets and levels of trade costs. In this more general setting, the domestic trade share and endogenous trade elasticity are no longer sufficient statistics for welfare. Additional empirically observable moments of the micro structure also matter for welfare. (JEL F12, F13, F41)
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In a class of trade models which satisfy a constant elasticity gravity equation, the welfare gains from trade can be computed using the open economy domestic trade share and a constant trade elasticity. The measured welfare gains from trade from this quantitative approach are typically relatively modest. In this paper, we suggest a channel for welfare gains that this quantitative approach typically abstracts from: trade-induced changes in domestic productivity. Using a model of sequential production, in which trade induces a reorganization of production that raises domestic productivity, we show that the welfare gains from trade can become arbitrarily large.
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This paper exploits the division of Germany after the Second World War andthe reunification of East and West Germany in 1990 as a natural experimentto provide evidence for the importance of market access for economic development.In line with a standard new economic geography model, we find that,following division, cities in West Germany close to the East-West German borderexperienced a substantial decline in population growth relative to otherWest German cities. We show that the model can account for the quantitativemagnitude of our findings and provide additional evidence against alternativepossible explanations. (JEL F15, N94, R12, R23)
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We provide theory and evidence that the elasticity of local employment to a labor demand shock is heterogeneous depending on the commuting openness of the local labor market. We develop a quantitative general equilibrium model that incorporates spatial linkages in goods markets (trade) and factor markets (commuting and migration). We quantify this model to match the observed gravity equation relationships for trade and commuting. We find that empirically-observed reductions in commuting costs generate welfare gains of around 3.3 percent. We provide separate quasi-experimental evidence in support of the model's predictions using the location decisions of million dollar plants.
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We provide theory and evidence on the relationship between globalization and pandemics. Business travel facilitates trade and travel leads to human interactions that transmit disease. Trade-motivated travel generates an epidemiological externality across countries. If infections lead to deaths, or reduce individual labor supply, we establish a general equilibrium social distancing effect, whereby increases in relative prices in unhealthy countries reduce travel to those countries. If agents internalize the threat of infection, we show that their behavioral responses lead to a reduction in travel that is larger for higher-trade-cost locations, which initially reduces the ratio of trade to output.
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This paper examines the frequency, pervasiveness, and determinants of productswitching by US manufacturing firms. We find that one-half of firms altertheir mix of five-digit SIC products every five years, that product switching iscorrelated with both firm- and firm-product attributes, and that product addingand dropping induce large changes in firm scope. The behavior we observe isconsistent with a natural generalization of existing theories of industry dynamicsthat incorporates endogenous product selection within firms. Our findingssuggest that product switching contributes to a reallocation of resources withinfirms toward their most efficient use. (JEL L11, L21, L25, L60)
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We study whether the effects on registered manufacturing output of dismantlingthe License Raj—a system of central controls regulating entry and productionactivity in this sector—vary across Indian states with different labor marketregulations. The effects are found to be unequal across Indian states with differentlabor market regulations. In particular, following delicensing, industrieslocated in states with pro-employer labor market institutions grew more quicklythan those in pro-worker environments. (JEL J50, L52,L60, O14, O15, O25)
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