Department of Economics
University of Colorado
Boulder CO 8-0309-0256
Institutional Affiliation: University of Colorado
NBER Working Papers and Publications
|January 2007||Trade in Business Services in General Equilibrium|
with James R. Markusen: w12816
Trade in business services has been attracting attention from academic researchers, policy makers, and business journalists. While there are many anecdotes, there has been little in the way of formal theory applied to this issue. In this paper, we adapt a general model of fragmentation of production activities to try to capture the specific features of business services. Following a general discussion, we calibrate a numerical general-equilibrium simulation model to a situation in which both trade and foreign investment in services are initially banned to technically infeasible. We then compute three counter-factual scenarios: one in which trade but not investment in services is feasible or allowed, one in which investment but not trade is allowed, and onein which both trade and investm...