Competing Gains From Trade
|Title:||Competing Gains From Trade||Authors:||Struck, Clemens C.; Velic, Adnan||Permanent link:||http://hdl.handle.net/10197/10634||Date:||Mar-2019||Online since:||2019-05-23T09:45:23Z||Abstract:||Differences in growth rates across countries imply a strong relation between factor proportions based trade and key aggregate economic outcomes. We construct two macro-trade datasets and illustrate that this relation is rather weak in the data. We propose a simple explanation: in the presence of intra- industry trade, pronounced trade specialization patterns culminate in a loss of varieties. In a dynamic two-country model, we illustrate that the introduction of intra-industry trade overwhelmingly subdues the inter-industry trade dynamics and realigns the behavior of standard models with the empirical evidence along various dimensions. We also provide empirical support for our mechanism: labor and capital intensive goods are traded between developed and developing countries in both directions and in similar proportions in overall trade.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Series/Report no.:||UCD Centre for Economic Research Working Paper Series; WP19/09||Copyright (published version):||2019 the Authors||Keywords:||Heckscher Ohlin; Armington trade; Factor proportion based trade; Comparative advantage; Dynamic two-country general equilibrium models; Feldstein-Horioka||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
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