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The Impact of Trade on Intraindustry Reallocation and Aggregate Industry Productivity: A Comment / Richard E. Baldwin, Frederic Robert-Nicoud.
- Format:
- Book
- Author/Creator:
- Baldwin, Richard E.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w10718.
- NBER working paper series no. w10718
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- The Impact of Trade on Intraindustry Reallocation and Aggregate Industry Productivity
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2004.
- Summary:
- Melitz (2003) demonstrates that greater trade openness raises industry productivity via a selection effect and via a production re-allocation effect. Our comment points out that the set-up assumed in the Melitz model displays a trade off between static and dynamic efficiency gains. That is, although freer trade improves industry productivity in a level sense, it harms it in a growth sense. To make this point as simply as possible, we introduce a slight modification to the model that endogenises the growth rate of industry productivity and we show that liberalisation slows growth.
- Notes:
- Print version record
- August 2004.
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