Gravity, Productivity and the Pattern of Production and Trade
AbstractThe effects of geography and productivity on the global pattern of production are captured here in a specific factors gravity model. Simple enough for sharp results, the model is yet rich enough to contain the high dimensional productivity frictions in production and distribution of a many country world. The starting point is the international incidence of productivity frictions inferred from gravity. Sellers’ and buyers’ incidence both reduce real income. Sellers’ incidence shocks reduce sectoral skill premia. Bigger sellers’ incidence by country (sector) reduces equilibrium shares of world (national) GDP. In contrast to the generalized Ricardian gravity model of Eaton and Kortum (2002), relative factor endowments play a role and import-competing production and wage premia in exporting are featured.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14642.
Date of creation: Jan 2009
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Other versions of this item:
- James E. Anderson, 2008. "Gravity, Productivity and the Pattern of Production and Trade," Boston College Working Papers in Economics 700, Boston College Department of Economics.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F10 - International Economics - - Trade - - - General
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- James E. Anderson & Yoto V. Yotov, 2011.
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