In this paper we explore the effect of trade policy on productivity and welfare in the now standard model of firm … establish that welfare can be decomposed into four terms: productivity, terms of trade, variety and curvature, where the latter … allocation. We also show that an export subsidy generates an increase in productivity, but given the negative joint effect on the …

numerous empirical studies that claim to have found a positive effect of openness on growth. Two issues have been at the core … things given, TFP growth is faster in more open economies. The regressions reported here are robust to the use of openness … faster productivity growth. Although the use of instrumental variables goes a long way towards dealing with endogeneity …