【Macro Seminar】Quantifying the Extensive Margins of Trade and Production

  • 研討會日期 : 2024-03-07
  • 時間 : 10:30
  • 主講人 : Dr. David Torun
  • 地點 : Conference Room B110
  • 演講者簡介 : Dr. David Torun received his PhD from the University of St.Gallen in 2022. He is currently a Postdoctoral Researcher at the University of California, San Diego. His research interests are international trade and international economics.
  • 演講摘要 : This paper builds a model of international trade capturing that most countries have only a few trading partners within narrowly defined industries. The set of partner countries responds endogenously to shocks, thereby allowing to identify alternatives to key trading partners. I introduce trade zeros—i.e., an extensive margin of trade—via a bounded productivity distribution and a non-homothetic final-goodsassembly function. In the limit, without productivity caps, trade shares reduce to a standard gravity equation. I develop a novel calibration strategy to fit data on industry-level bilateral trade flows and aggregate production. Counterfactual exercises suggest that welfare changes after trade-cost shocks are typically amplified when accounting for the extensive margin of trade. In other words, capturing that most countries have only a few active trade relations within an industry magnifies the implications of global shocks. This is primarily true for low- to medium-income countries. The number of inactive industry-level trade relations changes by approximately half the shock size; for instance, a 10% rise in global trade costs increases the number of bilateral zeros by about 5%.