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Working Paper
Deindustrialization and Industry Polarization
Sposi, Michael; Yi, Kei-Mu; Zhang, Jing (2024-08-05)
We add to recent evidence on deindustrialization and document a new pattern: increasing industry polarization over time. We assess whether these new features of structural change can be explained by a dynamic open economy model with two primary driving forces, sector-biased productivity growth and sectoral trade integration. We calibrate the model to the same countries used to document our patterns. We find that sector-biased productivity growth is important for deindustrialization by reducing the relative price of manufacturing to services, and sectoral trade integration is important for ...
Globalization Institute Working Papers , Paper 428

Working Paper
Deindustrialization and Industry Polarization
Sposi, Michael; Yi, Kei-Mu; Zhang, Jing (2021-12-19)
We add to recent evidence on deindustrialization and document a new pattern: increasing industry polarization over time. We assess whether these new features of structural change can be explained by a dynamic open economy model with two primary driving forces, sector-biased productivity growth and sectoral trade integration. We calibrate the model to the same countries used to document our patterns. We find that sector-biased productivity growth is important for deindustrialization by reducing the relative price of manufacturing to services, and sectoral trade integration is important for ...
Working Paper Series , Paper WP 2022-44

Working Paper
Multimodal Transport Networks
Fuchs, Simon; Foong Wong, Woan (2022-10-05)
The movement of goods from origin to destination takes place over multiple modes of transportation. Correspondingly, intermodal terminals play an important role in facilitating transportation over the multimodal network. This paper studies multimodal transport networks and their impact on infrastructure investments. We propose a tractable theory of transportation across domestic transportation networks with multiple modes of transportation by embedding multimodal routes into a spatial equilibrium model with endogenous stochastic route choice. We calibrate the model to US domestic freight ...
FRB Atlanta Working Paper , Paper 2022-13

Working Paper
Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum
Sandler, Todd; Bandyopadhyay, Subhayu; Younas, Javed (2016-03-01)
We present a standard trade model and show that terrorism can be trade inducing, starting from autarky. In addition, terrorism can be shown to be welfare augmenting for a group of nations. Finally, we present some qualitative conditions that identify when a nation?s trade volume may rise (or fall) in response to a greater incidence of terrorism. Our trade and welfare results point to potential difficulties in international coordination of counterterrorism policy because of terrorism?s differential impact across nations.
Working Papers , Paper 2016-2

Working Paper
Trade Liberalization versus Protectionism: Dynamic Welfare Asymmetries
Ravikumar, B.; Sposi, Michael; Santacreu, Ana Maria (2023-08-20)
We investigate whether the losses from an increase in trade costs (protectionism) are equal to the gains from a symmetric decrease in trade costs (liberalization). We incorporate dynamics through capital accumulation into a standard Armington trade model and show that the welfare changes are asymmetric: Losses from protectionism are smaller than the gains from liberalization. In contrast, standard static trade models imply that the losses equal the gains. The intuition for asymmetry in our model is that, following protectionism, the economy can coast off of previously accumulated capital ...
Working Papers , Paper 2023-019

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
The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem
Smagghue, Gabriel; Liégey, Maxime; Basco, Sergi; Mestieri, Martí (2020-10-23)
This paper develops and implements a novel test of the Stolper-Samuelson theorem. We use nationally-representative matched employer-employee panel data from 1997 through 2015 to study the effect of the rise in China’s exports on French worker earnings. Our version of the Stolper-Samuelson theorem states that there is a negative correlation between occupation exposure to Chinese competition and change in worker earnings. First, we document substantial heterogeneity in trade adjustment across occupations. Then, consistent with the Stolper-Samuelson prediction, we show that workers initially ...
Working Paper Series , Paper WP-2020-24

Working Paper
TFP, Capital Deepening, and Gains from trade
Ravikumar, B.; Sposi, Michael; Santacreu, Ana Maria (2022-09-27)
We study welfare gains from trade in a dynamic, multicountry model with capital accumulation. We compute the exact transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization. We find that while the dynamic gains are different across countries, consumption transition paths look similar except for scale. In addition, dynamic gains accrue gradually and are about 60 percent of steady-state gains for every country. Finally, the contribution of capital accumulation to dynamic gains is four times that of TFP.
Working Papers , Paper 2022-034

Report
Trade Models, Trade Elasticities, and the Gains from Trade
Simonovska, Ina; Waugh, Michael E. (2025-08-26)
We argue that the welfare gains from trade in models with micro-level margins exceed those in frameworks without these margins. Theoretically, we show that for fixed trade elasticity, different models predict identical trade flows, but different patterns of microlevel price variation. Thus, given data on trade flows and micro-level prices, different models have different implied trade elasticities and welfare gains. Empirically, models with extensive or variable mark-up margins yield significantly larger welfare gains. Our trade elasticity estimates are robust over time in contrast to leading ...
Staff Report , Paper 674

Working Paper
Capital goods trade and economic development
Ravikumar, B.; Sposi, Michael; Mutreja, Piyusha (2014-05-16)
We argue that international trade in capital goods has quantitatively important effects on economic development through two channels: (i) capital formation and (ii) aggregate TFP. We embed a multi country, multi sector Ricardian model of trade into a neoclassical growth model. Barriers to trade result in a misallocation of factors both within and across countries. Our model matches several trade and development facts within a unified framework. It is consistent with the world distribution of capital goods production, cross-country differences in investment rate and price of final goods, and ...
Working Papers , Paper 2014-12

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