We measure the gains from a trade cost reduction in a model with dynamic accumulation of factors. We show that the tight link between import intensity and gains from trade that exists in static models breaks down along transition paths in dynamic models. When trade costs are reduced, the need to...

We deliver one month's average profit to a randomly selected group of female microenterprise owners in the Kenyan slum of Dandora, just preceding with the exponential growth of COVID-19 cases. Firm profit, inventory spending, and food expenditures all increase. The transfers simultaneously cause...

We measure the impact of increasing integration between rural villages and outside labor markets. Seasonal flash floods cause exogenous and unpredictable loss of market access. We study the impact of new bridges that eliminate this risk. Identification exploits variation in riverbank...

Applied general equilibrium (AGE) models, which feature multiple countries, multiple industries, and input–output linkages across industries, have been the dominant tool for evaluating the impact of trade reforms since the 1980s. We review how these models are used to perform policy analysis...

Atkinson, Piketty, and Saez [2011] find a post-1979 surge in taxfiler top income shares in “English speaking countries” (surge countries) but not in “continental European countries and Japan” (no-surge countries). We find the puzzle that Comtrade import-to-GDP ratios and...

How important is the exercise of classical monopsony power against labor for the level of wages and labor's share? We examine this in the context of China and India – two large, rapidly-growing developing economies. Using theory, we develop a novel screen to quantify how wages are affected by...

The neoclassical growth model (NGM), which is widely used to study macroeconomic phenomena, has a constant labor share built in. However, several recent studies show that the labor share has been declining since at least the 1980s. This calls into question whether the NGM should still be used as...

We consider policy distortions in a model where plants face idiosyncratic productivity shocks that evolve following a Brownian motion. Introducing idiosyncratic shocks into the model implies that plants have non-constant operating profits and as a result there is an endogenous exit margin and...

We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs' forgone wage in the span-of-control model