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Trade Theory with Numbers: Quantifying the Consequences of Globalization

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  • Arnaud Costinot
  • Andrés Rodríguez-Clare

Abstract

We review a recent body of theoretical work that aims to put numbers on the consequences of globalization. A unifying theme of our survey is methodological. We rely on gravity models and demonstrate how they can be used for counterfactual analysis. We highlight how various economic considerations—market structure, firm-level heterogeneity, multiple sectors, intermediate goods, and multiple factors of production—affect the magnitude of the gains from trade liberalization. We conclude by discussing a number of outstanding issues in the literature as well as alternative approaches for quantifying the consequences of globalization.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18896.

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Date of creation: Mar 2013
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Handle: RePEc:nbr:nberwo:18896

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Cited by:
  1. Jung, Benjamin & Felbermayr, Gabriel & Larch, Mario, 2013. "Icebergs versus Tariffs: A Quantitative Perspective on the Gains from Trade," Munich Reprints in Economics 19542, University of Munich, Department of Economics.
  2. Nicholas Bloom & Paul Romer & Stephen Terry & John Van Reenen, 2014. "Trapped Factors and China's Impact on Global Growth," CEP Discussion Papers dp1261, Centre for Economic Performance, LSE.
  3. Richard Frensch & Jan Hanousek & Evzen Kocenda, 2013. "Specialization, gravity, and European trade in final goods," William Davidson Institute Working Papers Series wp1054, William Davidson Institute at the University of Michigan.
  4. Fritz Breuss, 2014. "TTIP and its Effects on Austria. A Critical Literature Survey," WIFO Working Papers 468, WIFO.

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