Trade Liberalization and Firm Dynamics
AbstractIn this paper, we analyze the transition dynamics associated with an economy's response to trade liberalization. We start by reviewing the recent literature that incorporates firm dynamics into models of international trade. We then build upon that literature to characterize the role of firm dynamics, export-market selection, firm-level innovation, sunk export costs, and firms expectations regarding the time path of liberalization in generating those transition dynamics following trade liberalization. These modeling ingredients generate substantial aggregate transition dynamics as they shift and shape the endogenous distribution of firms over time. Our results show how the responses of trade volumes, innovation, and aggregate output can vary greatly over time depending on those modeling ingredients. This has important consequences for many issues in international economics that rely on predictions for the effects of globalization over time on those key aggregate outcomes.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16960.
Date of creation: Apr 2011
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Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-23 (All new papers)
- NEP-BEC-2011-04-23 (Business Economics)
- NEP-DGE-2011-04-23 (Dynamic General Equilibrium)
- NEP-INT-2011-04-23 (International Trade)
- NEP-OPM-2011-04-23 (Open Economy Macroeconomic)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Technology Adoption and the Selection Effect of Trade,"
Economics Working Papers
ECO2007/58, European University Institute.
- Antonio Navas-Ruiz & Davide Sala, 2007. "Technology adoption and the selection effect of trade," Economics Working Papers we076737, Universidad Carlos III, Departamento de Economía.
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- Ngo Van Long & Horst Raff & Frank Stähler, 2009.
"Innovation and Trade with Heterogeneous Firms,"
CESifo Working Paper Series
2796, CESifo Group Munich.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Trade Liberalization and Firm Dynamics
by Christian Zimmermann in NEP-DGE blog on 2011-04-26 14:09:20
- Philipp J.H. Schröder & Allan Sørensen, 2011.
"Firm Exit, Technological Progress and Trade,"
Economics Working Papers
2011-17, School of Economics and Management, University of Aarhus.
- Peter Arendorf Bache, 2012. "A Dynamic Model of Trade with Heterogeneous Firms," Economics Working Papers 2012-03, School of Economics and Management, University of Aarhus.
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