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Gains from Trade with Flexible Extensive Margin Adjustment / Chang-Tai Hsieh, Nicholas Li, Ralph Ossa, Mu-Jeung Yang.
- Format:
- Book
- Author/Creator:
- Hsieh, Chang-Tai.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w22069.
- NBER working paper series no. w22069
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2016.
- Summary:
- We propose a new sufficient statistic to measure the gains from trade in models where the extensive margin trade elasticity is not necessarily constant. This statistic is a function of one data moment, the market share of continuing domestic products, and one parameter, the elasticity of substitution between products. It measures the gains from trade in a Ricardian model with any productivity distribution or a Melitz model with any productivity distribution and any pattern of selection into production and exporting. We apply our statistic to measure Canada's gains from the Canada-US Free Trade Agreement and find that they are smaller than suggested by statistics that assume a constant extensive margin response of trade.
- Notes:
- Print version record
- March 2016.
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