NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Aggregating from Micro to Macro Patterns of Trade

Stephen J. Redding, David E. Weinstein

NBER Working Paper No. 24051
Issued in November 2017
NBER Program(s):International Trade and Investment Program

We develop a new framework for aggregating from micro to macro patterns of trade. We derive price indexes that determine comparative advantage across countries and sectors and the aggregate cost of living. If firms and products are imperfect substitutes, we show that these price indexes depend on variety, average demand/quality and the dispersion of demand/quality-adjusted prices, and are only weakly related to standard empirical measures of average prices, thereby providing insight for elasticity puzzles. Of the cross-section (time-series) variation in comparative advantage, 50 (90) percent is accounted for by variety and average demand/quality, with average prices contributing less than 10 percent.

download in pdf format
   (598 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24051

Users who downloaded this paper also downloaded* these:
Feenstra, Ma, and Xu w24056 US Exports and Employment
Johnson w24027 Measuring Global Value Chains
Pavcnik w23878 The Impact of Trade on Inequality in Developing Countries
Liu and Meissner w24121 Geography, Income, and Trade in the 21st Century
Morrow and Trefler w24078 Endowments, Skill-Biased Technology, and Factor Prices: A Unified Approach to Trade
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us