Department of Economics
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NBER Working Papers and Publications
|March 2018||Trade with Correlation|
with Natalia Ramondo: w24380
We develop a trade model in which productivity—the result of a country’s ability to adopt global technologies—presents an arbitrary pattern of spatial correlation. The model generates the full class of import demand systems consistent with Ricardian theory, and, hence, captures its full macroeconomic implications. In particular, our framework formalizes Ricardo’s insight—absent from the canonical Ricardian model—that countries gain more from trade partners with relatively dissimilar technology. Incorporating this insight into the calculations of macro counterfactuals entails a simple correction to self-trade shares. Our framework enables general aggregation results which tie micro optimization to macro demand systems and guide counterfactual analysis based on micro estimates. Our quantitat...
|November 2015||The Dynamics of Comparative Advantage|
with Gordon H. Hanson, Marc-Andreas Muendler: w21753
This paper characterizes the dynamic empirical properties of country export capabilities in order to inform modelling of the long-run behavior of comparative advantage. The starting point for our analysis is two strong empirical regularities in international trade that have previously been studied incompletely and in isolation to one another. The literature has noted a tendency for countries to concentrate exports in a few sectors. We show that this concentration arises from a heavy-tailed distribution of industry export capabilities that is approximately log normal and whose shape is stable across countries, sectors, and time. Likewise, previous research has detected a tendency for mean reversion in national industry productivities. We establish that mean reversion in export capability, r...