Trade Flows, Multilateral Resistance, and Firm Heterogeneity / Alberto Behar, Benjamin D. Nelson.

Format:

Book

Government document

Author/Creator:

Behar, Alberto.

Contributor:

Nelson, Benjamin D.

International Monetary Fund. Middle East and Central Asia Department.

Series:

IMF Working Papers; Working Paper ; No. 2012/297

IMF Working Papers

Language:

English

Subjects (All):

International trade--Econometric models.

International trade.

Balance of trade.

Physical Description:

1 online resource (40 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2012.

Language Note:

English

Summary:

We present a gravity model that accounts for multilateral resistance, firm heterogeneity and country-selection into trade, while accommodating asymmetries in trade flows. A new equation for the proportion of exporting firms takes a gravity form, such that the extensive margin is also affected by multilateral resistance. We develop Taylor approximated multilateral resistance terms with which to capture the comparative static effects of changes in trade costs. For isolated bilateral changes in trade frictions, multilateral resistance effects are small for most countries. However, if all countries reduce their trade frictions, the impact of multilateral resistance is so strong that bilateral trade falls in most cases, despite the larger trade elasticities implied by firm heterogeneity. As a consequence, the world-wide trade response, though positive, is much lower.

Contents:

Cover; Contents; I. Introduction; II. The Model; III. Comparative Statics in a Frictionless World; IV. Empirical Comparative Statics; A. Gross Elasticities; B. Bilateral Changes in Trade Costs; Tables; 1. Summary Statistics for Estimates of Gross Country-level Elasticity; Figures; 1. Effects of MR for Bilateral Changes in Distance; 2. Elasticity for a Bilateral Reduction in Trade Frictions; 2. Net Elasticity and Country-pair GDP Share when Bilateral Distance Falls in Isolation; C. Multilateral Changes in Trade Costs; 3. Lowest Bilateral Elasticities

3. Effects of MR When All Countries Reduce Frictions4. Elasticity for a Multilateral Reduction in Trade Frictions; D. World-wide Elasticities; 4. Net Elasticity and Country-pair GDP Share When All Countries Reduce Frictions; V. Concluding Remarks; 5. Impact of Firm Heterogeneity and MR on World-wide Elasticities; References; Appendices; A. Derivation of Gravity Equation; B. Taylor Approximation; C. Proof of Proposition 1: Bilateral Changes; D. Proof of Proposition 2: Multilateral Changes; E. Description of Variables; F. Description of Empirical Methodology; G. Regression Results

Notes:

"Middle East and Central Asia Department."

"December 2012."

Includes bibliographical references.

Description based on print version record.

ISBN:

9781475555363

1475555369

9781475519204

1475519206

9781299264700

1299264700

9781475578188

1475578180