IDEAS home Printed from https://ideas.repec.org/p/luc/wpaper/16-19.html
   My bibliography  Save this paper

Variety and Quality in Trade Dynamics

Author

Listed:
  • Hamano Masashige

    () (Sophia University, Tokyo)

Abstract

This paper provides a simple two-country DSGE model that includes endoge- nous determination of both the number of traded varieties and the traded products quality with heterogeneous firms. By introducing product quality explicitly, the theo- retical model sheds light on the cyclical properties of quality in international trade. We find that aggregate product quality of exports and imports are both negatively correlated with real exports and imports in the US data. Our model can replicate a wedge-shaped pattern of cross-correlations, together with a number of statistics on US trade dynamics. We also perform several impulse response analyses and find that trade liberalization induces quality downgrading of exports and imports, which negatively impacts consumer welfare.

Suggested Citation

  • Hamano Masashige, 2016. "Variety and Quality in Trade Dynamics," CREA Discussion Paper Series 16-19, Center for Research in Economic Analysis, University of Luxembourg.
  • Handle: RePEc:luc:wpaper:16-19
    as

    Download full text from publisher

    File URL: http://wwwfr.uni.lu/content/download/96018/1162056/file/2016_19%20Variety%20and%20Quality%20in%20Trade%20Dynamics.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Masashige Hamano, 2017. "Missing Risk Sharing from International Transmission through Product Quality and Variety," CREA Discussion Paper Series 17-17, Center for Research in Economic Analysis, University of Luxembourg.

    More about this item

    Keywords

    product quality; product variety; firm entry; firm heterogeneity;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:luc:wpaper:16-19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisa Ferreira). General contact details of provider: http://edirc.repec.org/data/crcrplu.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.