Germany overtook Britain in comparative productivity levels for the whole economy primarily as a result of trends in services rather than trends in industry. Britain’s productivity lead in services before World War II reflected external economies of scale in a highly urbanised economy with an...

This paper analyzes the reaction of exporters to exchange rate changes. We present a model where, in the presence of distribution costs in the export market, high and low productivity firms react differently to a depreciation . Whereas high productivity firms optimally raise their markup rather...

This paper analyses the welfare implications of international spillovers related to productivity gains, changes in market size, or government spending. We introduce trade costs and endogenous varieties in a two-country general-equilibrium model with monopolistic competition, drawing a...

This Paper first documents the comparative productivity performance of the United States and Britain since 1870, showing the importance of developments in services. We identify the transition in market services from customized, low-volume, high margin business organized on a network basis to...

This paper analyzes empirically the effect of spatial agglomeration of activities on the productivity of firms using French individual firm data from 1996 to 2004. This allows us to control for endogeneity biases that the estimation of agglomeration economies typically encounters. French firms...

This paper takes a modest step towards formalizing the theoretical interconnections among four post-Industrial-Revolution phenomena – the industrialization and growth take-off of rich ‘northern’ nations, massive global income divergence, and rapid trade expansion. Specifically, we present...

This paper constructs a model of endogenous growth and endogenous industry location where the two interact. We show that with global spillovers in R&D, a high growth rate and a high level of transaction costs are associated with relocation of the newly created firms to the South (the location...

This paper presents a model in which growth and geographic agglomeration of economic activities are mutually self reinforcing processes. Industrial agglomeration in one location spurs growth because it reduces the cost of innovation in that location through a pecuniary externality due to...