Abstract

http://ssrn.com/abstract=812011
 
 

References (35)



 
 

Citations (13)



 


 



Tradability, Productivity, and Understanding International Economic Integration


Paul R. Bergin


University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Reuven Glick


Federal Reserve Bank of San Francisco - Center for Pacific Basin Monetary & Economic Studies

September 2005

NBER Working Paper No. w11637

Abstract:     
This paper develops a two-country macro model with endogenous tradability to study features of international economic integration. Recent episodes of integration in Europe and North America suggest some surprising observations: while quantities of trade have increased significantly, especially along the extensive margin, price dispersion has not decreased and may even have increased. We propose a way of reconciling these price and quantity observations in a macroeconomic model where the decision of heterogeneous firms to trade internationally is endogenous. Trade is shaped both by the nature of heterogeneity -- trade costs versus productivity -- and by the nature of trade policies -- cuts in fixed costs versus cuts in per unit costs like tariffs. For example, in contrast to tariff cuts, trade policies that work mainly by lowering various fixed costs of trade may have large effects on entry decisions at the extensive margin without having direct effects on price-setting decisions. Whether this entry raises or lowers overall price dispersion depends on the type of heterogeneity that distinguishes the new entrants from incumbent traders.

Number of Pages in PDF File: 38

working papers series


Download This Paper

Date posted: November 23, 2005  

Suggested Citation

Bergin, Paul R. and Glick, Reuven, Tradability, Productivity, and Understanding International Economic Integration (September 2005). NBER Working Paper No. w11637. Available at SSRN: http://ssrn.com/abstract=812011

Contact Information

Paul R. Bergin (Contact Author)
University of California, Davis - Department of Economics ( email )
One Shields Drive
1141 Social Sciences & Humanities Bldg.
Davis, CA 95616-8578
United States
530-752-8398 (Phone)
530-752-9382 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Reuven Glick
Federal Reserve Bank of San Francisco - Center for Pacific Basin Monetary & Economic Studies ( email )
101 Market Street
San Francisco, CA 94105
United States
415-974-3184 (Phone)
415-974-2168 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 299
Downloads: 18
References:  35
Citations:  13

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.250 seconds