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Working Paper
The Evolution of Comparative Advantage: Measurement and Implications
Levchenko, Andrei A.; Zhang, Jing (2014-10-07)
We estimate productivities at the sector level for 72 countries and 5 decades, and examine how they evolve over time in both developed and developing countries. In both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at greater comparative disadvantage. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. In the counterfactual scenario in which each country's comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the ...
Working Paper Series , Paper WP-2014-12

Working Paper
Demographics and the Evolution of Global Imbalances
Sposi, Michael (2017-12-01)
The age distribution evolves asymmetrically across countries, influencing relative saving rates and labor supply. Emerging economies experienced faster increases in working age shares than advanced economies did. Using a dynamic, multicountry model I quantify the effect of demographic changes on trade imbalances across 28 countries since 1970. Counterfactually holding demographics constant reduces net exports in emerging economies and boosts them in advanced economies. On average, a one percentage point increase in a country?s working age share, relative to the world, increases its ratio of ...
Globalization Institute Working Papers , Paper 332

Working Paper
Spoils of War: Trade Shocks and Segmented Labor Markets in Spain during WWI
Fuchs, Simon (2021-05-28)
How does intranational factor mobility shape the welfare effects of a trade shock? I provide evidence that during WWI, a demand shock emanated from belligerent countries and affected neutral Spain. Within Spain, labor predominantly reallocated locally, while the most affected provinces experienced drastic increases in wages and consumer prices. Embedding imperfect labor mobility in an economic geography model, I show that external demand shocks can improve allocative efficiency, but asymmetric shocks cause localized increases in wages and consumer prices instead of reallocation. Adjusting an ...
FRB Atlanta Working Paper , Paper 2021-14

Working Paper
Structural Change in Sub-Saharan Africa: An Open Economy Perspective
de Vries, Gaaitzen; Yi, Kei-Mu; Mensah, Emmanuel; Kruse, Hagen; Vidogbena, Yabo (2024-12-24)
We study the evolution of manufacturing value added shares in 11 sub-Saharan African (SSA) countries through the lens of an open economy model of structural change. Our analysis leverages recent developments in input-output tables in SSA countries. Our model allows for income effects via non-homothetic preferences, substitution and relative price effects, as well as comparative advantage and specialization effects. We calibrate our model to include each SSA country with nine other major economies for each year between 2000 and 2018. We also do a similar set of calibrations for 11 developing ...
Working Papers , Paper 2418

Working Paper
Capital Accumulation and Dynamic Gains from Trade
Sposi, Michael; Santacreu, Ana Maria; Ravikumar, B. (2017-01-01)
We compute welfare gains from trade in a dynamic, multi-country Ricardian model where international trade affects capital accumulation. We calibrate the model for 93 countries and examine transition paths between steady-states after a permanent, uniform trade liberalization across countries. Our model allows for both the relative price of investment and the investment rate to depend on the world distribution of trade barriers. Accounting for transitional dynamics, welfare gains are about 60 percent of those measured by comparing only the steady-states, and three times larger than those with ...
Globalization Institute Working Papers , Paper 296

Working Paper
Globalization and inflation in Europe
Auer, Raphael; Degen, Kathrin; Fischer, Andreas M. (2010)
What is the impact of import competition from other low-wage countries (LWCs) on inflationary pressure in Western Europe? This paper seeks to understand whether labor-intensive exports from emerging Europe, Asia, and other global regions have a uniform impact on producer prices in Germany, France, Italy, Sweden, and the United Kingdom. In a panel covering 110 (4-digit) NACE industries from 1995 to 2008, IV estimates predict that LWC import competition is associated with strong price effects. More specifically, when Chinese exporters capture 1 percent of European market share, producer prices ...
Globalization Institute Working Papers , Paper 65

Working Paper
Globalization and Heterogeneity: Evidence from Hollywood
Adler, Konrad; Fuchs, Simon (2022-10-06)
Linder (1961) conjectured that taste differences could impede trade flows. We extend Krugman (1980) to allow for producers that face taste heterogeneity with volatile demand. Consumers are characterized by different taste over product attributes and idiosyncratic risk. Firms face a portfolio type of problem where they trade off supplying the largest consumer groups against higher exposure to group-specific risk. We develop an empirical strategy to estimate consumer taste from observed market shares across multiple distinct markets of the same product, as well as the key parameters that pin ...
FRB Atlanta Working Paper , Paper 2022-14

Working Paper
Multimodal Transport Networks
Fuchs, Simon; Foong Wong, Woan (2024-10)
We examine the economic and environmental impacts of improvements and disruptions in multimodal transport networks. Our quantitative spatial equilibrium model incorporates routing over multiple modes and congestion at intermodal terminals. We estimate a modal substitution elasticity with highway and rail data and a terminal congestion elasticity with vessel-positioning data. Calibrated to the US freight network, our model identifies key bottlenecks and quantifies $300 million–$700 million in additional real GDP gains from intermodal terminal improvements. These gains are 2.5 times higher ...
FRB Atlanta Working Paper , Paper 2022-13

Working Paper
The 2025 Trade War: Dynamic Impacts Across U.S. States and the Global Economy
Rodríguez-Clare, Andrés; Ulate, Mauricio; Vasquez, Jose P. (2025-04-22)
We use a dynamic trade and reallocation model with downward nominal wage rigidities to quantitatively assess the economic consequences of the recent increase in the U.S. tariffs on imports from Mexico, Canada, and China, as well as the “reciprocal” tariff changes announced on “Liberation Day” and retaliatory measures by other countries. Higher tariffs trigger an expansion in U.S. manufacturing employment, but this comes at the expense of declines in service and agricultural employment, with overall employment declining as lower real wages reduce labor-force participation. For the ...
Working Paper Series , Paper 2025-09

Working Paper
3-D Gains from Trade
Fitzgerald, Doireann (2024-12-24)
Static trade models imply modest gains from trade. I quantify the gains from trade in a multi-country dynamic stochastic environment, taking into account the contributions to welfare of trade across states of the world, and over time, as well as trade within dates and states (3-D gains). For developing countries, which have volatile productivity, standard risk aversion implies that 3-D gains from trade are at least twice as big as static gains, even under financial autarky. Because productivity is less volatile for developed countries, their 3-D gains from trade are only modestly bigger than ...
Working Papers , Paper 809

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