In this paper, we provide a detailed analysis of a mechanism that distorts production towards too much use of primary factors like labor and too little use of intermediate inputs. The distortion results from two ingredients that are cornerstones of modern quantitative trade theory: monopolistic...

In this paper, we zoom in on the firm level of German merchandise foreign trade, using a novel data base with information on the export and import value by firm, country, product and year for the period 2011-2019. Problems arising from the consolidated reporting of taxable entities and the...

Vor 200 Jahren hat einer der Gründungsväter der modernen Volkswirtschaftslehre, David Ricardo, in seinem Buch Principles of Political Economy and Taxation die Theorie der komparativen Vorteile vorgestellt. Vom Abbau von Handelsbarrieren profitieren alle Länder, sogar die, die im Vergleich zu...

Die deutsche Volkwirtschaft ist seit 1990 deutlich offener geworden. Der Anteil der Exporte am BIP hat sich zwischen 1990 und 2016 von 20% auf 46% und jener der Importe von 20% auf 38% erhöht. Die heimische Wertschöpfung, die hinter Güter- und Dienstleistungsexporten steckt, hat sich auf 32%...

Die deutsche Volkswirtschaft ist seit 1990 durch den Fall des Eisernen Vorhangs, den Beitritt von 16 neuen Mitgliedern in die EU, den Aufstieg und WTO-Beitritt Chinas, die Einführung des Euro, die Schaffung des Schengen-Raums und den Abschluss verschiedener Freihandelsabkommen der EU mit...

In New Trade Theory models, the larger region hosts an overproportionate share of producers. This Home Market Effect (HME) exacerbates regional income discrepancies caused by trade frictions or technology differences. With homogeneous firms, it requires inter-industry reallocations to emerge. We...

Arkolakis, Costinot and Rodriguez-Clare (ACR, 2012) prove that, conditional on the change in openness, the welfare gains from foreign trade reforms are quantitatively identical across single-sector trade models with radically different micro-foundations. We generalize this result to domestic and...

Recent quantitative trade models treat import tariffs as pure cost shifters so that their effects are similar to iceberg trade costs. We introduce revenue-generating import tariffs, which act as demand shifters, into the framework of Arkolakis, Costinot and Rodriguez-Clare (2012), and generalize...

Increasing-returns-to-scale imperfect competition trade models predict a more than proportionate relationship between the larger country's share in world endowments and its share in producing firms: the so called home market effect (HME). While this result plays a key role in empirical testing,...

How do input-output linkages modify countries' incentives to conduct commercial policies? We address this question in a version of the Melitz (2003) model where the production-side of the economy is enriched by input-output linkages. The bundle of intermediate inputs used in production in...