Imported inputs and the gains from trade

被引:9
|
作者
Ramanarayanan, Ananth [1 ]
机构
[1] Univ Western Ontario, Dept Econ, Social Sci Ctr, Room 4071, London, ON N6A 5C2, Canada
关键词
Welfare gains from trade; Imported inputs; Plant-level heterogeneity; PRODUCTIVITY; MODELS;
D O I
10.1016/j.jinteco.2019.103260
中图分类号
F [经济];
学科分类号
02 ;
摘要
This paper characterizes how plant-level heterogeneity in imported input use affects the aggregate welfare gains from trade. Heterogeneous plants choose a fraction of inputs to source from the lowest cost source country, with the rest purchased domestically. Sourcing more inputs requires higher up-front fixed costs, but reduces variable input costs, so import shares are increasing in plant size. Welfare gains are inversely proportional to the general equilibrium elasticity of the aggregate import share with respect to variable trade costs. A standard bilateral gravity regression underestimates this elasticity by not capturing the effects of trade costs on the input sourcing decision. The welfare gains from trade in the model are therefore lower than the gains implied by a gravity-based estimate of the trade elasticity. When calibrated to Chilean plant-level data, this difference is substantial. (C) 2019 Elsevier B.V. All rights reserved.
引用
收藏
页数:16
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