This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
Varieties and the Transfer Problem: The Extensive Margin of Current Account Adjustment Author info | Abstract | Publisher info | Download info | Related research | Statistics Giancarlo Corsetti
Philippe Martin
Paolo Pesenti
Additional information is available for the following
registered author(s):
Most analyses of the macroeconomic adjustment required to correct global imbalances ignore net exports of new varieties of goods and services and do not account for firms'net entry in the product market. In this paper we revisit the macroeconomics of trade adjustment in the context of the classic 'transfer problem', using a model where the set of exportables, importables and nontraded goods is endogenous. We show that exchange rate movements associated with adjustment are dramatically lower when the above features are accounted for, relative to traditional macromodels. We also find that, for reasonable parameterizations, consumption and employment (hence welfare) are not highly sensitive to product differentiation, and change little regardless of whether adjustment occurs through movements in relative prices or quantities. This result warns against interpreting the size of real depreciation associated with trade rebalancing as an index of macroeconomic distress.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Paper provided by European University Institute in its series RSCAS Working Papers with number
2008/01.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length:
Date of creation: 24 Jan 2008Date of revision:
Handle: RePEc:rsc:rsceui:2008/01Contact details of provider: Postal: Convento, Via delle Fontanelle, 19, 50014 San Domenico di Fiesole (FI) Italy Web page: http://www.eui.eu/RSCAS/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Jacqueline Gordon).
Keywords: transfer problem ; current account ; global imbalances ; extensive margin ; Other versions of this item:
Paper Giancarlo Corsetti & Philippe Martin & Paolo Pesenti, 2008.
"Varieties and the Transfer Problem: The Extensive Margin of Current Account Adjustment ,"
NBER Working Papers
13795, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Corsetti, Giancarlo & Martin, Philippe & Pesenti, Paolo, 2008.
"Varieties and the Transfer Problem: the Extensive Margin of Current Account Adjustment ,"
CEPR Discussion Papers
6660, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) This paper has been announced in the following NEP Reports :
References listed on IDEAS 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.: Timothy J. Kehoe & Kim J. Ruhl, 2006.
"How Important is the New Goods Margin in International Trade? ,"
2006 Meeting Papers
733, Society for Economic Dynamics.
[Downloadable!]
Other versions: Robert Dekle & Jonathan Eaton & Samuel Kortum, 2007.
"Unbalanced Trade ,"
American Economic Review ,
American Economic Association, vol. 97(2), pages 351-355, May.
[Downloadable!]
Other versions: Rauch, James E., 1999.
"Networks versus markets in international trade ,"
Journal of International Economics ,
Elsevier, vol. 48(1), pages 7-35, June.
[Downloadable!] (restricted)
Other versions: Altonji, Joseph G, 1986.
"Intertemporal Substitution in Labor Supply: Evidence from Micro Data ,"
Journal of Political Economy ,
University of Chicago Press, vol. 94(3), pages S176-S215, June.
[Downloadable!] (restricted)
Other versions: Feenstra, Robert C, 1994.
"New Product Varieties and the Measurement of International Prices ,"
American Economic Review ,
American Economic Association, vol. 84(1), pages 157-77, March.
[Downloadable!] (restricted)
Paul Krugman, 1989.
"Differences In Income Elasticities and Trends in Real Exchange Rates ,"
NBER Working Papers
2761, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Corsetti, Giancarlo & Martin, Philippe & Pesenti, Paolo, 2007.
"Productivity, terms of trade and the `home market effect' ,"
Journal of International Economics ,
Elsevier, vol. 73(1), pages 99-127, September.
[Downloadable!] (restricted)
James E. Anderson & Eric van Wincoop, 2004.
"Trade Costs ,"
NBER Working Papers
10480, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Jiandong Ju & Shang-Jin Wei, 2007.
"Current Account Adjustment: Some New Theory and Evidence ,"
NBER Working Papers
13388, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Hamid Faruqee & Douglas Laxton & Dirk Muir & Paolo A. Pesenti, 2007.
"Smooth Landing or Crash? Model-Based Scenarios of Global Current Account Rebalancing ,"
NBER Chapters ,
in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 377-456
National Bureau of Economic Research, Inc.
[Downloadable!]
Other versions: Debaere, Peter & Mostashari, Shalah, 2005.
"Do Tariffs Matter for the Extensive Margin of International Trade? An Empirical Analysis ,"
CEPR Discussion Papers
5260, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Caballero, Ricardo & Farhi, Emmanuel & Gourinchas, Pierre-Olivier, 2006.
"An Equilibrium Model of 'Global Imbalances' and Low Interest Rates ,"
CEPR Discussion Papers
5573, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2006.
"An Equilibrium Model of Global Imbalances and Low Interest Rates ,"
2006 Meeting Papers
894, Society for Economic Dynamics.
[Downloadable!] Ricardo Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2006.
"An Equilibrium Model of "Global Imbalances" and Low Interest Rates ,"
Center for International and Development Economics Research, Working Paper Series
1067, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
[Downloadable!] Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2006.
"An Equilibrium Model of "Global Imbalances" and Low Interest Rates ,"
NBER Working Papers
11996, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Ricardo J Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2006.
"An equilibrum model of "global imbalances" and low interest rates ,"
BIS Working Papers
222, Bank for International Settlements.
[Downloadable!] Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2008.
"An Equilibrium Model of "Global Imbalances" and Low Interest Rates ,"
American Economic Review ,
American Economic Association, vol. 98(1), pages 358-93, March.
[Downloadable!] Philip R. Lane & Gian Maria Milesi-Ferretti, 2004.
"The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates ,"
The Review of Economics and Statistics ,
MIT Press, vol. 86(4), pages 841-857, 02.
[Downloadable!] (restricted)
Other versions:
Philip R. Lane & Gian Maria Milesi-Ferretti, 2000.
"The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates ,"
Working Papers
062000, Hong Kong Institute for Monetary Research.
[Downloadable!] Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2000.
"The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates ,"
CEPR Discussion Papers
2511, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Gian Maria Milesi-Ferretti & Philip R. Lane, 2000.
"The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates ,"
IMF Working Papers
00/123, International Monetary Fund.
MaCurdy, Thomas E, 1981.
"An Empirical Model of Labor Supply in a Life-Cycle Setting ,"
Journal of Political Economy ,
University of Chicago Press, vol. 89(6), pages 1059-85, December.
[Downloadable!] (restricted)
Browning, Martin & Hansen, Lars Peter & Heckman, James J., 1999.
"Micro data and general equilibrium models ,"
Handbook of Macroeconomics ,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 8, pages 543-633
Elsevier.
[Downloadable!] (restricted)
Other versions: Heckman, James J & Macurdy, Thomas E, 1980.
"A Life Cycle Model of Female Labour Supply ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 47(1), pages 47-74, January.
[Downloadable!] (restricted)
Enrique G. Mendoza & Vincenzo Quadrini & Jose-Victor Rios-Rull, 2007.
"Financial Integration, Financial Deepness and Global Imbalances ,"
NBER Working Papers
12909, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Brakman, Steven & van Marrewijk, Charles, 1995.
"Transfers, returns to scale, tied aid and monopolistic competition ,"
Journal of Development Economics ,
Elsevier, vol. 47(2), pages 333-354, August.
[Downloadable!] (restricted)
Christian Broda & David E. Weinstein, 2007.
"Product Creation and Destruction: Evidence and Price Implications ,"
NBER Working Papers
13041, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Caroline Freund & Frank Warnock, 2007.
"Current Account Deficits in Industrial Countries: The Bigger They Are, The Harder They Fall? ,"
NBER Chapters ,
in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 133-168
National Bureau of Economic Research, Inc.
[Downloadable!]
Other versions: Christian Broda & David E. Weinstein, 2006.
"Globalization and the Gains from Variety ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 121(2), pages 541-585, May.
[Downloadable!] (restricted)
Other versions:
Christian Broda & David E. Weinstein, 2004.
"Globalization and the Gains from Variety ,"
NBER Working Papers
10314, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) David E. Weinstein & Christian Broda, 2004.
"Globalization And The Gains From Variety ,"
Econometric Society 2004 Latin American Meetings
327, Econometric Society.
[Downloadable!] David Weinstein & Christian Broda, 2004.
"Globalization and the Gains from Variety ,"
2004 Meeting Papers
530, Society for Economic Dynamics.
[Downloadable!] David Weinstein & Christian Broda, 2004.
"Globalization and the Gains from Variety ,"
Econometric Society 2004 North American Summer Meetings
508, Econometric Society.
[Downloadable!] Christian Broda & David Weinstein, 2004.
"Globalization and the gains from variety ,"
Staff Reports
180, Federal Reserve Bank of New York.
[Downloadable!] Paul R. Bergin & Reuven Glick, 2003.
"Endogenous Tradability and Macroeconomic Implications ,"
NBER Working Papers
9739, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Marcel Fratzscher & Luciana Juvenal & Lucio Sarno, 2007.
"Asset prices, exchange rates and the current account ,"
Working Paper Series
790, European Central Bank.
[Downloadable!]
Other versions: Rogerson, Richard, 1988.
"Indivisible labor, lotteries and equilibrium ,"
Journal of Monetary Economics ,
Elsevier, vol. 21(1), pages 3-16, January.
[Downloadable!] (restricted)
Maurice Obstfeld & Kenneth S. Rogoff, 2005.
"Global Current Account Imbalances and Exchange Rate Adjustments ,"
Brookings Papers on Economic Activity ,
Economic Studies Program, The Brookings Institution, vol. 36(2005-1), pages 67-146.
[Downloadable!]
Reuven Glick & Paul Bergin, 2003.
"Endogenous Nontradability and Macroeconomic Implications ,"
Computing in Economics and Finance 2003
106, Society for Computational Economics.
[Downloadable!]
Other versions: Christian Broda & David W. Weinstein, 2004.
"Variety Growth and World Welfare ,"
American Economic Review ,
American Economic Association, vol. 94(2), pages 139-144, May.
[Downloadable!]
Andrea Ferrero & Mark Gertler & Lars E.O. Svensson, 2008.
"Current Account Dynamics and Monetary Policy ,"
NBER Working Papers
13906, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Marc J. Melitz, 2003.
"The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity ,"
Econometrica ,
Econometric Society, vol. 71(6), pages 1695-1725, November.
[Downloadable!] (restricted)
Other versions: Linghui Tang, 2006.
"Communication Costs and Trade of Differentiated Goods ,"
Review of International Economics ,
Blackwell Publishing, vol. 14(1), pages 54-68, 02.
[Downloadable!] (restricted)
Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity ,"
American Economic Review ,
American Economic Association, vol. 67(3), pages 297-308, June.
[Downloadable!] (restricted)
Other versions: Kei-Mu Yi, 2003.
"Can Vertical Specialization Explain the Growth of World Trade? ,"
Journal of Political Economy ,
University of Chicago Press, vol. 111(1), pages 52-102, February.
[Downloadable!] (restricted)
Other versions: Joseph E. Gagnon, 2003.
"Productive capacity, product varieties, and the elasticities approach to the trade balance ,"
International Finance Discussion Papers
781, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!]
Other versions: Maurice Obstfeld & Kenneth Rogoff, 2007.
"The Unsustainable U.S. Current Account Position Revisited ,"
NBER Chapters ,
in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 339-376
National Bureau of Economic Research, Inc.
[Downloadable!]
Other versions:
Maurice Obstfeld & Kenneth Rogoff, 2004.
"The Unsustainable US Current Account Position Revisited ,"
NBER Working Papers
10869, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Maurice Obstfeld & Kenneth Rogoff, 2005.
"The Unsustainable US Current Account Position Revisited ,"
Center for International and Development Economics Research, Working Paper Series
1063, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
[Downloadable!] Obstfeld, Maurice & Rogoff, Kenneth, 2005.
"The Unsustainable US Current Account Position Revisited ,"
CEPR Discussion Papers
5416, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Maurice Obstfeld & Kenneth Rogoff, 2005.
"The unsustainable U.S. current account position revisited ,"
Proceedings ,
Federal Reserve Bank of San Francisco.
[Downloadable!] Maurice Obstfeld & Kenneth Rogoff, 2005.
"The unsustainable U.S. current account position revisited ,"
Proceedings ,
Federal Reserve Bank of San Francisco, issue Feb.
[Downloadable!] Blundell, Richard & Macurdy, Thomas, 1999.
"Labor supply: A review of alternative approaches ,"
Handbook of Labor Economics ,
in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695
Elsevier.
[Downloadable!] (restricted)
Other versions: David Hummels & Peter J. Klenow, 2005.
"The Variety and Quality of a Nation's Exports ,"
American Economic Review ,
American Economic Association, vol. 95(3), pages 704-723, June.
[Downloadable!]
Full
references Cited by : (explanations , 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.)
Doireann Fitzgerald, 2007.
"Trade Costs, Asset Market Frictions and Risk Sharing: A Joint Test ,"
Working Papers
CAS_RN_2007_7, Laboratory for Macroeconomic Analysis.
[Downloadable!]
Ehsan U. Choudhri & Lawrence L. Schembri, 2009.
"Productivity, the Terms of Trade, and the Real Exchange Rate: The Balassa-Samuelson Hypothesis Revisited ,"
Working Papers
09-22, Bank of Canada.
[Downloadable!]
Gian Maria Milesi-Ferretti, 2008.
"Fundamentals at Odds? The U.S. Current Account Deficit and The Dollar ,"
IMF Working Papers
08/260, International Monetary Fund.
[Downloadable!]
Other versions: Robert Dekle & Jonathan Eaton & Samuel Kortum, 2008.
"Global Rebalancing with Gravity: Measuring the Burden of Adjustment ,"
NBER Working Papers
13846, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Access and
download statistics Did you know? Cannot find something on IDEAS? Encourage the publisher to index it! Instructions .
This page was last updated on 2009-11-10.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .