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Goods Trade, Factor Mobility and Welfare

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  • Stephen J. Redding

Abstract

This paper extends a recent class of quantitative models of international trade to incorporate factor mobility within countries. We present a model-based decomposition of the variance of economic activity into the contributions of locational fundamentals, market access and their covariance. We show how the standard framework for undertaking model-based counterfactuals in trade can be augmented to obtain predictions for endogenous changes in the distribution of economic activity across regions within countries. A region's trade share with itself is no longer a sufficient statistic for the welfare gains from trade, which also depend on endogenous changes in the distribution of mobile factors.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1140.

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Date of creation: Apr 2012
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Handle: RePEc:cep:cepdps:dp1140

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: International trade; factor mobility; welfare gains from trade;

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References

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  6. repec:cge:warwcg:13 is not listed on IDEAS
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Citations

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Cited by:
  1. Holger Breinlich & Gianmarco I.P. Ottaviano & Jonathan R.W. Temple, 2013. "Regional growth and regional decline," Economics Discussion Papers 729, University of Essex, Department of Economics.
  2. Pablo Fajgelbaum & Stephen J. Redding, 2014. "External Integration, Structural Transformation and Economic Development: Evidence From Argentina," CEP Discussion Papers dp1273, Centre for Economic Performance, LSE.
  3. Stephen J. Redding & Matthew A. Turner, 2014. "Transportation Costs and the Spatial Organization of Economic Activity," CEP Discussion Papers dp1277, Centre for Economic Performance, LSE.
  4. Natalia Ramondo & Andrés Rodríguez-Clare & Milagro Saborío-Rodríguez, 2012. "Scale Effects and Productivity Across Countries: Does Country Size Matter?," NBER Working Papers 18532, National Bureau of Economic Research, Inc.
  5. Trevor Tombe & Jennifer Winter, 2014. "What's Inside Counts: Migration, Taxes, and the Internal Gains from Trade," Working Papers 2013-28, Department of Economics, University of Calgary, revised 05 May 2014.
  6. A. Kerem Coşar & Pablo D. Fajgelbaum, 2013. "Internal Geography, International Trade, and Regional Specialization," NBER Working Papers 19697, National Bureau of Economic Research, Inc.

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