International Trade and Income Differences
I develop a novel view of the trade frictions between rich and poor countries by arguing that to reconcile bilateral trade volumes and price data within a standard gravity model, the trade frictions between rich and poor countries must be systematically asymmetric, with poor countries facing higher costs to export relative to rich countries. I provide a method to model these asymmetries and demonstrate the merits of my approach relative to alternatives in the trade literature. I then argue that these trade frictions are quantitatively important to understanding the large differences in standards of living and total factor productivity across countries. (JEL F11, F13, F14, O19 )
Year of publication: |
2010
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Authors: | Waugh, Michael E. |
Published in: |
American Economic Review. - American Economic Association - AEA. - Vol. 100.2010, 5, p. 2093-2124
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Publisher: |
American Economic Association - AEA |
Saved in:
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