Trade Theory with Numbers: Quantifying the Consequences of Globalization

Costinot, Arnaud; Rodríguez-Clare, Andrés

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Trade Theory with Numbers: Quantifying the Consequences of Globalization

CEPR Discussion Paper No. DP9398

68 Pages Posted: 19 Mar 2013

See all articles by Arnaud Costinot

Arnaud Costinot

University of California, San Diego (UCSD) - Department of Economics; Massachusetts Institute of Technology (MIT) - Department of Economics

Andrés Rodríguez-Clare

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

There are 2 versions of this paper

Date Written: March 2013

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.

Keywords: counterfactual analysis, globalization, gravity models, trade policy, welfare analysis

JEL Classification: F11, F12, F13, F15, F17, F60, F62

Suggested Citation: Suggested Citation

Costinot, Arnaud and Costinot, Arnaud and Rodríguez-Clare, Andrés, Trade Theory with Numbers: Quantifying the Consequences of Globalization (March 2013). CEPR Discussion Paper No. DP9398, Available at SSRN: https://ssrn.com/abstract=2235496