NBER Working Papers by B. Ravikumar

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Working Papers

April 2016Measuring Openness to Trade
with Michael E. Waugh: w22147
In this paper we derive a new measure of openness—trade potential index—that quantifies potential gains from trade as a simple function of data. Using a standard multicountry trade model, we measure openness by a country’s potential welfare gain from moving to a world with frictionless trade. In this model, a country’s trade potential depends on only the trade elasticity and two observable statistics: the country’s home trade share and its income level. Quantitatively, poor countries have greater potential gains from trade relative to rich countries, while their welfare costs of autarky are similar. This leads us to infer that rich countries are more open to trade. Our trade potential index correlates strongly with estimates of trade costs, while both the welfare cost of autarky and the vo...

Published: Michael E. Waugh & B. Ravikumar, 2016. "Measuring Openness to Trade," Journal of Economic Dynamics and Control, .

September 1990Participation Dynamics: Sunspots and Cycles
with Satyajit Chatterjee, Russell Cooper: w3438
This paper investigates the possibility of sunspots equilibria and endogenous cycles in an overlapping generations model with strategic interactions. We consider an economy with imperfectly competitive product markets. There is a participation decision on the part of prospective firms and a strategic complementarity emerges from the interaction of firms in their entry decisions both over time and across sectors. When these complementarities are sufficiently strong, multiple steady state equilibria will exist. Sunspot equilibria can then be constructed as randomizations in the neighborhood of these steady states. We relate the properties of our sunspot equilibria to aggregate fluctuations, with particular emphasis on the dynamics of entry and exit. We also show that if intratemporal strateg...

Published: "Strategic Complementarity in Business Formation: Aggregate Fluctuations and Sunspot Equilibria" Review of Economic Studies, Vol. 60, pp. 795-811 (1993).

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