Results for “paul romer” 134 found
Meeting of the minds?
Bernanke: “If you get to choose between being rich or famous, I would vote for rich.”
On Twitter, Paul Romer responded:
Nah. Rich is over-rated. It’s too hard to turn money into satisfaction.
The links are here. What should we infer from this dialogue? Model this, so says I…
Addendum: Romer adds comment on Twitter…and more…and more.
My International Trade reading list for Fall 2015
This is quite long, so it goes under the fold…class starts tomorrow night!
Books: Jacob Viner, Studies in the Theory of International Trade (on-line, optional).
All videos can be found on MRUniversity.com, if not in the international trade section than in the development economics class or a few on Mexico in the Mexico class. In general I recommend viewing the videos before tackling the readings.
I. Comparative advantage and free trade
Bernhofen, Daniel and John C. Brown. 2005. “An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan.” American Economic Review.
Autor, David H. David Dorn and Gordon H. Hanson. Untangling Trade and Technology: Evidence from Local Labour Markets. The Economic journal, 2015, 125 (584), p. 621 – 646.
Acemoglu, Daron, David Autor, David Dorn, and Gordon H. Hanson. 2014. “Import Competition and the Great US Employment Sag of the 2000s.” NBER Working Paper.
Feenstra, Robert C. 2008. “Offshoring in the Global Economy.” Ohlin Lecture Series, Lecture 1 only, through p.66 only.
Grossman, Gene M. and Esteban Rossi-Hansberg. 2006. “The Rise of Offshoring: It’s Not Wine for Cloth Anymore.” Federal Reserve Bank of Kansas City.
Donaldson, David. 2011. “Trade and Labor Markets.” powerpoint.
Khandelwal, Amit. 2009. “The Long and Short (of) Quality Ladders.” Review of Economic Studies.
Baldwin, Richard. 2011. “How Trade and Industrial Organization After Globalization’s 2nd Unblundling: How Building and Joining a Supply Chain are Different and Why it Matters.” NBER Working Paper. Also this is a chapter in the NBER book Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century (2014), Robert C. Feenstra and Alan M. Taylor, editors, pp. 165–212.
Goldberg, Pinelopi Koujianou and Nina Pavcnik. 2007. “Distributional Effects of Globalization in Developing Countries.” Journal of Economic Literature.
Tyler Cowen, “Why the theory of comparative advantage is overrated,” Marginal Revolution blog post, https://marginalrevolution.com/marginalrevolution/2013/09/why-the-theory-of-comparative-advantage-is-overrated.html
Videos: The two videos on Comparative Advantage, Sources of Comparative Advantage, Development and Trade, empirical evidence, Evidence on Comparative Advantage from Japan, Factor price equalization, Specific Factors Models, Economics of Offshoring, The Rybczynski Theorem, Trade, Investment, and Migration as Substitutes, Unbundling the Supply Chain.
II.Tariffs
Paul Krugman. “The One-Minute Trade Policy Theorist.” (powerpoint)
The Economic Benefits of U.S. trade, Office of the President of the United States, May 2015.
Broda, Christian, Nuno Limao, and David Weinstein. 2008. “Optimal Tariffs and Market Power: The Evidence.” American Economic Review.
Arkolakis, Costas, Arnaud Costinot and Andres Rodriguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review.
Melitz, Marc J. “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity,” Econometrica 2003.
Kehoe, Timothy J. and Kim J. Ruhl. 2006. “How Important Is the New Goods Margin in International Trade?” NBER Working Paper, and now just published, Journal of Political Economy 2013.
Bernhofen, Daniel M., Zouheir El-Sahli, and Richard Kneller. 2012. “Estimating the Effects of the Container Revolution on World Trade.” University of Nottingham Discussion Paper Series.
Nunn, Nathan and Daniel Trefler. 2010. “The Structure of Tariffs and Long-Term Growth.” American Economic Review.
Dave Donaldson, “Trade and Growth (Empirics)”, MIT Lectures notes.
Videos: Tariffs v. Quotas, International Trade Disciplines Monopolies, Monopolistic Competition and International Trade, Effective rate of protection, Theory of Optimal Tariffs, Trade and Variety, Does “fair trade” help?, Malawi restrict trade in corn, Market reforms in Bangladesh, John Stuart Mill Terms of trade, The Shipping Container.
III. Heckscher-Ohlin and factor abundance theories of trade
Helpman, Elhanan. 1999. “The Structure of Foreign Trade.” Journal of Economic Perspectives.
Debaere, Peter. 2003. “Factor Abundance and Trade.” Journal of Political Economy.
Deardorff, Alan V. 1979. “Weak Links in the Chain of Comparative Advantage.” Journal of International Economics.
Trefler, Daniel. 1993. “International Factor Price Differences: Leontief Was Right!” Journal of Political Economy.
Davis, Donald R. and David E. Weinstein. 2001. “What Role for International Trade.” NBER Working Paper.
Davis, Donald R. 1995. “Intra-Industry Trade: A Heckscher-Ohlin-Ricardo Approach.” Journal of International Economics.
Trefler, Daniel. 1995. “The Case of the Missing Trade and Other Mysteries.” American Economic Review.
Costino, Arnaud and Jonathan Vogel. “Beyond Ricardo: Assignment Models in International Trade,” NBER Working Paper, October 2014.
Videos: What is at Stake in Trade Theories?, The Heckscher-Ohlin Theorem, Evidence on the Heckscher-Ohlin Theorem.
IV. Increasing Returns
Donaldson, David. “Increasing Returns to Scale and Monopolistic Trade.” Powerpoint, on-line, http://economics.mit.edu/files/7444
Helpman, Elhanan. 1987. “Imperfect Competition and International Trade: Evidence from Fourteen Industrial Countries.” Journal of the Japanese and International Economics.
Davis, Donald R. and David E. Weinstein. 2003. “Market Access, Economic Geography, and Comparative Advantage: An Empirical Test.” Journal of International Economics.
Antweiler, Werner ; Trefler, Daniel. Increasing Returns and All That: A View from Trade, American Economic Review, 1 March 2002, Vol.92(1), pp.93-119.
Debaere, Peter. 2005. “Monopolistic Competition and Trade, Revisited: Testing the Model Without Testing for Gravity.” Journal of International Economics.
Yi, Kei-Mu. 2003. “Can Vertical Specialization Explain the Growth of World Trade?” Journal of Political Economy.
Harrigan, James. 2001. “Specialization and the Volume of Trade: Do the Data Obey the Laws?” NBER Working Paper.
Bernard, Andrew B. ; Jensen, J. Bradford ; Redding, Stephen J. ;Schott, Peter K. “Firms in International Trade,” Journal of Economic Perspectives, 1 July 2007, Vol.21(3), pp.105-130.
Helpman, Elhanan. Foreign Trade and Investment: Firm‐level Perspectives,” Economica, 2014, Vol.81(321), pp.1-14.
Tybout, James R. 2001. “Plant- and Firm-Level Evidence on “New” Trade Theories.” NBER Working Paper.
Bernard, Andrew B. and J. Bradford Jensen. 2004. “Why Some Firms Export.” Review of Economics and Statistics.
Baldwin, Richard ; Harrigan, James. Zeros, Quality, and Space: Trade Theory and Trade Evidence,” American Economic Journal: Microeconomics, 1 May 2011, Vol.3(2), pp.60-88.
Armenter, Roc and Koren, Miklos. “A Balls-and-Bins Model of Trade.” American Economic Review, 2014, https://www.aeaweb.org/articles.php?doi=10.1257/aer.104.7.2127.
Videos: Trade and External Economies of Scale, Monopolistic Competition and International Trade, Trade and Increasing Returns: Evidence, Paul Romer, Robert Torrens on strategic trade policy, The Economics of Bollywood.
V. Is there a trade and industrialization slowdown?
Hausmann, Ricardo, Jason Hwang, and Dani Rodrik. “What You Export Matters.” Journal of Economic Growth, 12, 1, March 2007, 1-25.
Rodrik, Dani. “The Future of Economic Convergence.” Harvard Kennedy School, August 2011, RWP11-033.
Rodrik, Dani. “Unconditional Convergence in Manufacturing.” Quarterly Journal of Economics, 2012.
Rodrik, Dani. “The Perils of Premature Deindustrialization.” Project Syndicate, 11 October 2013.
Rodrik, Dani. “Are Services the New Manufactures?” Project Syndicate, October 13, 2014.
Davies, Gavyn. “Why world trade growth has lost its mojo.” The Financial Times, January 9, 2015.
VI. Gravity models
Anderson, James and Eric van Wincoop. 2004. “Trade Costs” Journal of Economic Literature.
Head, Keith. 2011. “Gravity for Beginners.” Presented at US-Canada Border Conference.
Donaldson, David. 2011. “Gravity Models.” No Journal—powerpoint.
Hummels, David. 2007. “Transportation Costs and International Trade in the Second Era of Globalization.” Journal of Economic Perspectives.
Anderson, James and Eric van Wincoop. 2003. “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review.
Eaton, Jonathan and Samuel Kortum. 2002. “Technology, Geography, and Trade.” Econometrica.
Chaney, Thomas. “The Network Structure of International Trade,” American Economic Review 2014.
Video: The Gravity Equation and the Costs of Trade.
VII. Trade in economic history
Harrison, Ann and Andres Rodriguez-Clare. 2010. “Trade, Foreign Investment, and Industrial Policy for Developing Countries.” Handbook of Development Economics, Volume 5, Ch 63, also the same is Ann Harrison and Andres Rodriguez-Clare. 2009. “Trade, Foreign Investment, and Industrial Policy for Developing Countries.” NBER Working Paper.
Irwin, Douglas. 2002. “Interpreting the Tariff-Growth Correlation of the Late Nineteenth Century.” American Economic Review.
Irwin, Douglas. 2002. “Did Import Substitution Promote Growth in the Late Nineteenth Century?” NBER Working Paper.
John Nye, “The Myth of Free Trade Britain and Fortress France,” Journal of Economic History, 1991.
Irwin, Douglas. 1997. “From Smoot-Hawley to Reciprocal Agreements: Changing the Course of U.S. Trade Policy in the 1930s.” NBER Working Paper.
Irwin, Douglas. 1998. “The Smoot-Hawley Tariff: A Quantitative Assessment.” The Review of Economic Statistics.
Crowley, Meredith A. and Xi Luo. 2011. “Understanding the Great Trade Collapse of 2008-09 and the Subsequent Trade Recovery.” Journal of Economic Perspectives.
Francois, Joseph and Julia Woerz. 2009. “The Big Drop: Trade and the Great Recession.” No Journal, article online.
Videos: Corn Law debates, Friedrich List, Robert Torrens on sliding tariffs, The Deindustrialization of India, Tariffs and Growth in the late 19thCentury, South Korea and Industrial Policy, The Smoot-Hawley Tariff, Why Did Trade Plummet in the Great Recession?
VIII. FDI and multinationals
Blonigen, Bruce. A Review of the Empirical Literature on FDI Determinants, Atlantic Economic Journal, 2005, 33, 4, pp.383-403
Ramondo, Natalia and Andres Rodriguez-Clare. 2013. “Trade, Multinational Production, and the Gains from Openness.” Journal of Political Economy, 2013, vol. 121, no. 2.
Antras, Pol and Stephen R. Yeaple. 2013. “Multinational Firms and the Structure of International Trade.” NBER Working Paper, it is also Pol Antras and Stephen Yeaple, “Multinational Firms and the Structure of International Trade,” 2013, Handbook of International Economics,Volume 4, http://dx.doi.org/10.1016/B978-0-444-54314-1.00002-1
Cole, Harold L., Jeremy Greenwood, and Juan M. Sanchez. “Why Doesn’t Technology Flow From Rich to Poor Countries?” National Bureau of Economic Research Working Paper, 20856, January 2015.
Videos: Basics of multinational corporations, Intra-firm Trade, Intra-industry Trade, Gains from Multinationals, Who Gains from FDI?, Productivity in firms, Foreign investment in India, Competition from foreign retailers, What is a Maquiladora? Introduction to NAFTA, NAFTA and Mexican Agriculture, The Effect of NAFTA on the Mexican Economy.
IX. The politics of trade
Grossman, Gene M. and Elhanan Helpman. 1994. “Protection for Sale.” American Economic Review.
Goldberg, Pinelopi Koujianou and Giovanni Maggi. 1999. “Protection for Sale: An Empirical Investigation.” American Economic Review.
Mayda, Anna Maria and Dani Rodrik. 2005. “What are Some People (and Countries) More Protectionist than Others?” European Economic Review.
Grossman, Gene M. and Elhanan Helpman. 1995. “The Politics of Free-Trade Agreements.” American Economic Review.
Harrison, Ann and Jason Scorse. 2010. “Multinational and Anti-Sweatshop Activism.” American Economic Review.
Videos: The Political Economy of Tariffs, Does Trade Help the Environment?, Regulation as a Major Trade Barrier, Who Supports Free Trade?, The Cultural Diversity Critique of Markets.
Extra readings and videos will be added, as global events indicate.
Pritchett’s Postulates and Urbanization
After promoting women’s groups in West Bengal as a route to development a West Bengali woman asked Lant Pritchett:
You all are from countries that are much richer and doing much better than our country so your country’s women’s self-help groups must also be much better, tell us how women’s self-help groups work in your country.
Pritchett’s inability to answer the question led him to what I call Pritchett’s postulates of development, four criteria to decide whether factor X is an important determinant of development.
- More developed countries must have more X than less developed countries.
- The developed countries must have more X than when they were less developed.
- Recent development successes must have more X than development failures.
- Countries that are developing rapidly must have more rapid growth of X than those that are developing slowly.
Since more developed countries don’t have noticeably more women’s self-help groups, this idea fails Pritchett’s postulates. Indeed, so do many fashionable development ideas being tested by RCTs which is one reason why Pritchett’s postulates are controversial in the development community.
Paul Romer, however, (whose important blog post led me to Pritchett’s postulates) has a different approach. Instead of dismissing ideas that fail the Pritchett postulates let’s look for ideas that pass them.
Romer provides evidence that urbanization passes all of Pritchett’s postulates. I think he is correct and that suggests that policies to increase the rate of urbanization could have a very big payoff for development.
We are used to thinking about urbanization as a consequence of development but it is surely also a cause. Consider, for example, the micro evidence. It’s not that rich people move to cities, it’s poor people who move to cities to become rich. We also know that cities are engines of innovation.
We can have too much urbanization or too much in one place as when we get a bloated capital city. Nevertheless, it seems that we could speed the rate of urbanization by reducing the cost of urban development – both the obvious costs like improving land allocation in say India but also improving sanitation and air quality in order to lower the health costs of urbanization. Similarly, well planned, efficient, even beautiful cities increase the benefits of urbanization. Urbanization policy in general becomes growth policy.
How else can we increase the rate of urbanization in developing countries?
Wednesday assorted links
Saturday assorted links
2. The bestselling book in each year.
3. Russ Roberts interviews Paul Romer.
4. “Being salamanders, they’re pretty slow.”
5. Yet another reason to eat beans (the Hispanic Paradox).
Assorted links
1. Does engaged time affect brand recall?
2. How and where to eat in Saigon, a fairly definitive treatment.
3. Fish-eating spiders. And Paul Romer on Mark Kleiman and crime.
4. Do young workers hate their jobs?
5. Rob Stavins on CO2 emissions, and here is the Gayer and Viscusi paper he cites.
6. “Vessyl automatically knows and tracks what you are drinking in real-time.”
7. Clayton Christensen responds to Jill Lepore.
8. This Krugman post cries out for the two words “gravity equation.” Here is an MRU video on the gravity equation and the cost of trade.
The legacy of Michael Bloomberg
During his tenure, the zoning rules for 37 per cent of the city were changed to permit redevelopment by the private sector, and work on some of the biggest projects is just getting started as he prepares to leave office at the end of this month.
“He is going to define the city for the next 25 years,” said Mitchell L Moss, a professor of urban policy and planning at New York University, and a campaign adviser to Mr Bloomberg in 2001. “It doesn’t matter who the next mayors are. They are still going to be attending groundbreakings for projects he started,” he said.
Much of this development is along the waterfront, which Bloomberg calls “the sixth borough.” There is more here, and the pointer is from Paul Romer.
Trade, Development and Genetic Distance
Trade increases development but the main driver appears not to be comparative advantage and the standard microeconomic “gains from trade” but rather factors emphasized by Adam Smith and Paul Romer such as the increasing returns to scale that drives innovation and investment in R&D and also the ways in which trade increases exposure to and adoption of foreign ideas.
It’s much easier, however, to trade goods than ideas. The price of wheat shows strong convergence around the world by the 19th century but even simple ideas like hand-washing transmit much more slowly. Complex ideas like the rights of women, the rule of law or the corporate form transmit even more slowly. Thus, one of the barriers to development is barriers to the transmission of ideas.
Enrico Spolaore and Romain Wacziarg have done pioneering work uncovering some of the deep factors of development by using genetic distance as a measure of the difficulty of communicating ideas. Spolaore and Wacziarg have a short paper in Vox summarizing their methods and findings.
[G]enetic distance is like a molecular clock – it measures average separation times between populations. Therefore, genetic distance can be used as a summary statistic for divergence in all the traits that are transmitted with variation from one generation to the next over the long run, including divergence in cultural traits.
Our hypothesis is that, at a later stage, when populations enter into contact with each other, differences in those traits create barriers to exchange, communication, and imitation.
…Our barriers model implies that different development patterns across societies should depend not so much on the absolute genetic distance between them, but more on their relative genetic distance from the world’s technological frontier. For example, when studying the spread of the Industrial Revolution in Europe in the 19th century, what matters is not so much the absolute distance between the Greeks and the Italians, but rather how much closer Italians were to the English than the Greeks were. Indeed, we show that the magnitude of the effect of genetic distance relative to the technological frontier is about three times as large as that of absolute genetic distance. When including both measures in the regression, genetic distance relative to the frontier remains significant while absolute genetic distance becomes insignificantly different from zero. The effects are large in magnitude – a one-standard-deviation increase in genetic distance relative to the technological frontier (the US in the 20th century) is associated with an increase in the absolute difference in log income per capita of almost 29% of that variable’s standard deviation.
Our model implies that after a major innovation, such as the Industrial Revolution, the effect of genealogical distance should be pronounced, but that it should decline as more and more societies adopt the innovations of the technological frontier (which, in the 19th century, was the UK). These predictions are supported by the historical evidence. The figure below shows the standardised effects of genetic distance relative to the frontier for a common sample of 41 countries, for which data are available at all dates. The figure is consistent with our barriers model. As predicted, the effect of genetic distance – which is initially modest in 1820 – rises by around 75% to reach a peak in 1913, and declines thereafter.
Figure 1. Standardised effect of genetic distance over time, 1820-2005
Final version of my International Trade class reading list
It is here under the fold, and I will still add some pieces, based on your earlier suggestions, though I have not read through them all yet…
International Trade reading list, Fall 2013
Books: Paul Krugman, Geography and Trade, and Development, Geography, and Economic Theory. Dani Rodrik, One Economics, Many Recipes, and Jacob Viner, Studies in the Theory of International Trade (on-line).
All videos can be found on MRUniversity.com, if not in the international trade section than in the development economics class or a few on Mexico in the Mexico class. In general I recommend viewing the videos before tackling the readings.
I. Comparative advantage and free trade
Bernhofen, Daniel and John C. Brown. 2005. “An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan.” American Economic Review.
Autor, David H. David Dorn and Gordon H. Hanson. 2013. “Untangling Trade and Technology: Evidence from Local Labor Markets.” NBER Working Paper.
Acemoglu, Daron, David Autor, David Dorn, and Gordon H. Hanson. 2013. “Import Competition and the Great US Employment Sag of the 2000s.” NBER Working Paper.
Feenstra, Robert C. 2008. “Offshoring in the Global Economy.” Ohlin Lecture Series.
Grossman, Gene M. and Esteban Rossi-Hansberg. 2006. “The Rise of Offshoring: It’s Not Wine for Cloth Anymore.” Federal Reserve Bank of Kansas City.
Grossman, Gene M. 2008. “Trading Tasks: A Simple Theory of Offshoring.” American Economic Review.
Donaldson, David. 2011. “Trade and Labor Markets.” powerpoint.
Khandelwal, Amit. 2009. “The Long and Short (of) Quality Ladders.” Review of Economic Studies.
Bernard, Andrew B., Stephen J Redding, and Peter K. Schott. 2012. “Testing the Factor Price Equality with Unobserved Differences in Factor Quality or Productivity.” U.S. Census Bureau Working Paper.
Baldwin, Richard. 2011. “How Trade and Industrial Organization After Globalization’s 2nd Unblundling: How Building and Joining a Supply Chain are Different and Why it Matters.” NBER Working Paper.
Goldberg, Pinelopi Koujianou and Nina Pavcnik. 2007. “Distributional Effects of Globalization in Developing Countries.” Journal of Economic Literature.
Videos: The two videos on Comparative Advantage, Sources of Comparative Advantage, Development and Trade, empirical evidence, Evidence on Comparative Advantage from Japan, Factor price equalization, Specific Factors Models, Economics of Offshoring, The Rybczynski Theorem, Trade, Investment, and Migration as Substitutes, Unbundling the Supply Chain.
II.Free trade and tariffs
Paul Krugman. “The One-Minute Trade Policy Theorist.” (powerpoint)
Humphrey, Thomas M. 1987. “Classical and Neoclassical Roots of The Theory of Optimum Tariffs.” Economic Review, Federal Reserve Bank of Richmond.
Broda, Christian, Nuno Limao, and David Weinstein. 2008. “Optimal Tariffs and Market Power: The Evidence.” American Economic Review.
Arkolakis, Costas, Arnaud Costinot and Andres Rodriguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review.
Kehoe, Timothy J. and Kim J. Ruhl. 2006. “How Important Is the New Goods Margin in International Trade?” NBER Working Paper, and now just published, Journal of Political Economy 2013.
Bernhofen, Daniel M., Zouheir El-Sahli, and RIchard Kneller. 2012. “Estimating the Effects of the Container Revolution on World Trade.” University of Nottingham Discussion Paper Series.
Nunn, Nathan and Daniel Trefler. 2010. “The Structure of Tariffs and Long-Term Growth.” American Economic Review.
Videos: Tariffs v. Quotas, International Trade Disciplines Monopolies, Effective rate of protection, Theory of Optimal Tariffs, Trade and Variety, Does “fair trade” help?, Malawi restrict trade in corn, Market reforms in Bangladesh, John Stuart Mill Terms of trade, The Shipping Container.
III. Heckscher-Ohlin and factor abundance theories of trade
Helpman, Elhanan. 1999. “The Structure of Foreign Trade.” Journal of Economic Perspectives.
Debaere, Peter. 2003. “Factor Abundance and Trade.” Journal of Political Economy.
Deardorff, Alan V. 1979. “Weak Links in the Chain of Comparative Advantage.” Journal of International Economics.
Trefler, Daniel. 1993. “International Factor Price Differences: Leontief Was Right!” Journal of Political Economy.
Davis, Donald R. and David E. Weinstein. 2001. “What Role for International Trade.” NBER Working Paper.
Davis, Donald R. 1995. “Intra-Industry Trade: A Heckscher-Ohlin-Ricardo Approach.” Journal of International Economics.
Deardorff, Alan V. 1982. “The General Validity of the Heckscher-Ohlin Theorem.” American Economic Review.
Videos: What is at Stake in Trade Theories?, The Heckscher-Ohlin Theorem, Evidence on the Heckscher-Ohlin Theorem.
IV. Increasing Returns
Donaldson, David. “Increasing Returns to Scale and Monopolistic Trade.” Powerpoint, on-line.
Helpman, Elhanan. 1987. “Imperfect Competition and International Trade: Evidence from Fourteen Industrial Countries.” Journal of the Japanese and International Economics.
Davis, Donald R. and David E. Weinstein. 2003. “Market Access, Economic Geography, and Comparative Advantage: An Empirical Test.” Journal of International Economics.
Baldwin, Richard and James Harrigan. 2010. “Zeros, Quality, and Space: Trade Theory and Trade Evidence.” NBER Working Paper.
Antweiler, Werner and Daniel Trefler. 2000. “Increasing Returns and All That: A View from Trade.” NBER Working Paper.
Debaere, Peter. 2005. “Monopolistic Competition and Trade, Revisited: Testing the Model Without Testing for Gravity.” Journal of International Economics.
Yi, Kei-Mu. 1999. “Can Vertical Specialization Explain the Growth of World Trade?” Journal of Political Economy.
Harrigan, James. 2001. “Specialization and the Volume of Trade: Do the Data Obey the Laws?” NBER Working Paper.
Bernard, Andrew B., J. Bradford Jensen, Stephen Redding, and Peter K. Schott. 2007. “Firms in International Trade.” NBER Working Paper.
Helpman, Elhanan. 2013. “Foreign Trade and Investment: Firm-Level Perspectives.” NBER Working Paper.
Tybout, James R. 2001. “Plant- and Firm-Level Evidence on “New” Trade Theories.” NBER Working Paper.
Bernard, Andrew B. and J. Bradford Jensen. 2004. “Why Some Firms Export.” Review of Economics and Statistics.
Videos: Trade and External Economies of Scale, Monopolistic Competition and International Trade, Trade and Increasing Returns: Evidence, Paul Romer, Robert Torrens on strategic trade policy, The Economics of Bollywood.
V. Gravity models
Anderson, James and Eric van Wincoop. 2004. “Trade Costs” Journal of Economic Literature.
Head, Keith. 2011. “Gravity for Beginners.” Presented at US-Canada Border Conference.
Hummels, David. 2007. “Transportation Costs and International Trade in the Second Era of Globalization.” Journal of Economic Perspectives.
Deardorff, Alan V. 1998. “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” NBER Working Paper.
Feenstra, Robert C., James R. Markusen, and Andrew K. Rose. 2001. “Using the Gravity Equation to Differentiate Among Alternative Theories of Trade.” The Canadian Journal of Economics.
Evenett, Simon J. and Wolfgang Keller. 1998. “On Theories Explaining the Success of the Gravity Equation.” NBER Working Paper.
Trefler, Daniel. 1995. “The Case of the Missing Trade and Other Mysteries.” American Economic Review.
Anderson, James and Eric van Wincoop. 2003. “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review.
Novy, Dennis. 2012. “Gravity Redux: Measuring International Trade Costs with Panel Data.” Economic Inquiry.
Eaton, Jonathan and Samuel Kortum. 2002. “Technology, Geography, and Trade.” Econometrica.
Donaldson, David. 2011. “Gravity Models.” No Journal—powerpoint.
Rossi-Hansberg, Esteban. 2005. “A Spatial Theory of Trade.” American Economic Review.
Chaney, Thomas. 2008. “Distorted Gravity: The Intensive and Extensive Margins of International Trade.” American Economic Review.
Anderson, James E. 1979. “A Theoretical Foundation for the Gravity Equation.” American Economic Review.
Video: The Gravity Equation and the Costs of Trade.
VI. Trade in economic history
Blecker, Robert A. 1997. “The ‘Unnatural and Retrograde Order’: Adam Smith’s Theories of Trade and Development Reconsidered.” Economica.
Irwin, Douglas. 2002. “Interpreting the Tariff-Growth Correlation of the Late Nineteenth Century.” American Economic Review.
Irwin, Douglas. 2002. “Did Import Substitution Promote Growth in the Late Nineteenth Century?” NBER Working Paper.
Clemens, Michael A. and Jeffrey G. Williamson. 2001. “A Tariff-Growth Paradox? Protection’s Impact on the World Around 1875-1997.” NBER Working Paper.
John Nye, “The Myth of Free Trade Britain and Fortress France,” Journal of Economic History, 1991.
Harrison, Ann and Andres Rodriguez-Clare. 2009. “Trade, Foreign Investment, and Industrial Policy for Developing Countries.” NBER Working Paper.
Irwin, Douglas. 1997. “From Smoot-Hawley to Reciprocal Agreements: Changing the Course of U.S. Trade Policy in the 1930s.” NBER Working Paper.
Irwin, Douglas. 1998. “The Smoot-Hawley Tariff: A Quantitative Assessment.” The Review of Economic Statistics.
Crowley, Meredith A. and Xi Luo. 2011. “Understanding the Great Trade Collapse of 2008-09 and the Subsequent Trade Recovery.” Journal of Economic Perspectives.
Gopinath, Gita and Oleg Itskhoki. 2009. “Trade Prices and the Global Trade Collapse of 2008-2009.” NBER Working Paper.
Francois, Joseph and Julia Woerz. 2009. “The Big Drop: Trade and the Great Recession.” No Journal, article online.
Videos: Corn Law debates, Friedrich List, Robert Torrens on sliding tariffs, The deindustrialization of India, Tariffs and Growth in the late 19thCentury, South Korea and Industrial Policy, The Smoot-Hawley Tariff, Why Did Trade Plummet in the Great Recession?
VII. FDI and multinationals
Blonigen, Bruce A. 2005. “A Review of the Empirical Literature on FDI Determinants.” NBER Working Paper.
Ramondo, Natalia and Andres Rodriguez-Clare. 2009. “Trade, Multinational Production, and the Gains from Openness.” NBER Working Paper.
Antras, Pol and Stephen R. Yeaple. 2013. “Multinational Firms and the Structure of International Trade.” NBER Working Paper.
Videos: Basics of multinational corporations, Intra-firm Trade, Intra-industry Trade, Gains from Multinationals, Who Gains from FDI?, Productivity in firms, Foreign investment in India, Competition from foreign retailers, What is a Maquiladora? Introduction to NAFTA, NAFTA and Mexican Agriculture, The Effect of NAFTA on the Mexican Economy.
VIII. The politics of trade
Grossman, Gene M. and Elhanan Helpman. 1994. “Protection for Sale.” American Economic Review.
Goldberg, Pinelopi Koujianou and Giovanni Maggi. 1999. “Protection for Sale: An Empirical Investigation.” American Economic Review.
Mayda, Anna Maria and Dani Rodrik. 2005. “What are Some People (and Countries) More Protectionist than Others?” European Economic Review.
Grossman, Gene M. and Elhanan Helpman. 1995. “The Politics of Free-Trade Agreements.” American Economic Review.
Harrison, Ann and Jason Scorse. 2010. “Multinational and Anti-Sweatshop Activism.” American Economic Review.
Videos: The Political Economy of Tariffs, Does Trade Help the Environment?, Regulation as a Major Trade Barrier, Who Supports Free Trade?, The Cultural Diversity Critique of Markets.
Some extra readings and videos will be added, as global events indicate.
My International Trade reading list
Many people have been asking me for this. It’s not yet finished, but you can find the current version under the fold of this post. Suggestions for adding are of course welcome…
Books: Paul Krugman, Pop Internationalism, Geography and Trade, and Development, Geography, and Economic Theory. Dani Rodrik, One Economics, Many Recipes, and Jacob Viner, Studies in the Theory of International Trade (on-line).
All videos can be found on MRUniversity.com, if not in the (forthcoming, in September) international trade section than in the development economics class or a few on Mexico in the Mexico class. In general I recommend viewing the videos before tackling the readings.
I. Comparative advantage and free trade
Bernhofen, Daniel and John C. Brown. 2005. “An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan.” American Economic Review.
Autor, David H. David Dorn and Gordon H. Hanson. 2013. “Untangling Trade and Technology: Evidence from Local Labor Markets.” NBER Working Paper.
Acemoglu, Daron, David Autor, David Dorn, and Gordon H. Hanson. 2013. “Import Competition and the Great US Employment Sag of the 2000s.” NBER Working Paper.
Goldberg, Pinelopi Koujianou and Nina Pavcnik. 2007. “Distributional Effects of Globalization in Developing Countries.” Journal of Economic Literature.
Videos: The two videos on Comparative Advantage, Sources of Comparative Advantage, Development and Trade, empirical evidence, Evidence on Comparative Advantage from Japan.
II.Free trade and tariffs
Paul Krugman. “The One-Minute Trade Policy Theorist.” (powerpoint)
Humphrey, Thomas M. 1987. “Classical and Neoclassical Roots of The Theory of Optimum Tariffs.” Economic Review, Federal Reserve Bank of Richmond.
Broda, Christian, Nuno Limao, and David Weinstein. 2008. “Optimal Tariffs and Market Power: The Evidence.” American Economic Review.
Arkolakis, Costas, Arnaud Costinot and Andres Rodriguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review.
Kehoe, Timothy J. and Kim J. Kuhl. 2006. “How Important Is the New Goods Margin in International Trade?” NBER Working Paper.
Bernhofen, Daniel M., Zouheir El-Sahli, and RIchard Kneller. 2012. “Estimating the Effects of the Container Revolution on World Trade.” University of Nottingham Discussion Paper Series.
Nunn, Nathan and Daniel Trefler. 2010. “The Structure of Tariffs and Long-Term Growth.” American Economic Review.
Videos: Tariffs v. Quotas, International Trade Disciplines Monopolies, Effective rate of protection, Theory of Optimal Tariffs, Does “fair trade” help?, Malawi restrict trade in corn, Market reforms in Bangladesh, John Stuart Mill Terms of trade, The Shipping Container.
III. Heckscher-Ohlin and factor abundance theories of trade
Helpman, Elhanan. 1999. “The Structure of Foreign Trade.” Journal of Economic Perspectives.
Debaere, Peter. 2003. “Factor Abundance and Trade.” Journal of Political Economy.
Deardorff, Alan V. 1979. “Weak Links in the Chain of Comparative Advantage.” Journal of International Economics.
Trefler, Daniel. 1993. “International Factor Price Differences: Leontief Was Right!” Journal of Political Economy.
Davis, Donald R. and David E. Weinstein. 2001. “What Role for International Trade.” NBER Working Paper.
Davis, Donald R. 1995. “Intra-Industry Trade: A Heckscher-Ohlin-Ricardo Approach.” Journal of International Economics.
Deardorff, Alan V. 1982. “The General Validity of the Heckscher-Ohlin Theorem.” American Economic Review.
Videos: What is at Stake in Trade Theories?, The Heckscher-Ohlin Theorem, Evidence on the Heckscher-Ohlin Theorem.
IV. Increasing Returns
Donaldson, David. “Increasing Returns to Scale and Monopolistic Trade.” Powerpoint, on-line.
Helpman, Elhanan. 1987. “Imperfect Competition and International Trade: Evidence from Fourteen Industrial Countries.” Journal of the Japanese and International Economics.
Davis, Donald R. and David E. Weinstein. 2003. “Market Access, Economic Geography, and Comparative Advantage: An Empirical Test.” Journal of International Economics.
Baldwin, Richard and James Harrigan. 2010. “Zeros, Quality, and Space: Trade Theory and Trade Evidence.” NBER Working Paper.
Antweiler, Werner and Daniel Trefler. 2000. “Increasing Returns and All That: A View from Trade.” NBER Working Paper.
Debaere, Peter. 2005. “Monopolistic Competition and Trade, Revisited: Testing the Model Without Testing for Gravity.” Journal of International Economics.
Yi, Kei-Mu. 1999. “Can Vertical Specialization Explain the Growth of World Trade?” Journal of Political Economy.
Harrigan, James. 2001. “Specialization and the Volume of Trade: Do the Data Obey the Laws?” NBER Working Paper.
Bernard, Andrew B., J. Bradford Jensen, Stephen Redding, and Peter K. Schott. 2007. “Firms in International Trade.” NBER Working Paper.
Helpman, Elhanan. 2013. “Foreign Trade and Investment: Firm-Level Perspectives.” NBER Working Paper.
Tybout, James R. 2001. “Plant- and Firm-Level Evidence on “New” Trade Theories.” NBER Working Paper.
Bernard, Andrew B. and J. Bradford Jensen. 2004. “Why Some Firms Export.” Review of Economics and Statistics.
Videos: Trade and External Economies of Scale, Monopolistic Competition and International Trade, Trade and Increasing Returns: Evidence, Paul Romer, Robert Torrens on strategic trade policy, The Economics of Bollywood.
V. Gravity models
Anderson, James and Eric van Wincoop. 2004. “Trade Costs” Journal of Economic Literature.
Head, Keith. 2011. “Gravity for Beginners.” Presented at US-Canada Border Conference.
Hummels, David. 2007. “Transportation Costs and International Trade in the Second Era of Globalization.” Journal of Economic Perspectives.
Deardorff, Alan V. 1998. “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” NBER Working Paper.
Feenstra, Robert C., James R. Markusen, and Andrew K. Rose. 2001. “Using the Gravity Equation to Differentiate Among Alternative Theories of Trade.” The Canadian Journal of Economics.
Evenett, Simon J. and Wolfgang Keller. 1998. “On Theories Explaining the Success of the Gravity Equation.” NBER Working Paper.
Trefler, Daniel. 1995. “The Case of the Missing Trade and Other Mysteries.” American Economic Review.
Anderson, James and Eric van Wincoop. 2003. “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review.
Novy, Dennis. 2012. “Gravity Redux: Measuring International Trade Costs with Panel Data.” Economic Inquiry.
Eaton, Jonathan and Samuel Kortum. 2002. “Technology, Geography, and Trade.” Econometrica.
Donaldson, David. 2011. “Gravity Models.” No Journal—powerpoint.
Rossi-Hansberg, Esteban. 2005. “A Spatial Theory of Trade.” American Economic Review.
Chaney, Thomas. 2008. “Distorted Gravity: The Intensive and Extensive Margins of International Trade.” American Economic Review.
Anderson, James E. 1979. “A Theoretical Foundation for the Gravity Equation.” American Economic Review.
Video: The Gravity Equation and the Costs of Trade.
VI. Offshoring and factor prices
No Author. “Trade and Factor Prices” (powerpoint)
Feenstra, Robert C. 2008. “Offshoring in the Global Economy.” Ohlin Lecture Series.
Grossman, Gene M. and Esteban Rossi-Hansberg. 2006. “The Rise of Offshoring: It’s Not Wine for Cloth Anymore.” Federal Reserve Bank of Kansas City.
Grossman, Gene M. 2008. “Trading Tasks: A Simple Theory of Offshoring.” American Economic Review.
Donaldson, David. 2011. “Trade and Labor Markets.” powerpoint.
Khandelwal, Amit. 2009. “The Long and Short (of) Quality Ladders.” Review of Economic Studies.
Bernard, Andrew B., Stephen J Redding, and Peter K. Schott. 2012. “Testing the Factor Price Equality with Unobserved Differences in Factor Quality or Productivity.” U.S. Census Bureau Working Paper.
Baldwin, Richard. 2011. “How Trade and Industrial Organization After Globalization’s 2nd Unblundling: How Building and Joining a Supply Chain are Different and Why it Matters.” NBER Working Paper.
Videos: Factor price equalization, Specific Factors Models, Economics of Offshoring, The Rybczynski Theorem, Trade, Investment, and Migration as Substitutes, Unbundling the Supply Chain.
VI. Trade in economic history
Blecker, Robert A. 1997. “The ‘Unnatural and Retrograde Order’: Adam Smith’s Theories of Trade and Development Reconsidered.” Economica.
Irwin, Douglas. 2002. “Interpreting the Tariff-Growth Correlation of the Late Nineteenth Century.” American Economic Review.
Irwin, Douglas. 2002. “Did Import Substitution Promote Growth in the Late Nineteenth Century?” NBER Working Paper.
Clemens, Michael A. and Jeffrey G. Williamson. 2001. “A Tariff-Growth Paradox? Protection’s Impact on the World Around 1875-1997.” NBER Working Paper.
John Nye, “The Myth of Free Trade Britain and Fortress France,” Journal of Economic History, 1991.
Harrison, Ann and Andres Rodriguez-Clare. 2009. “Trade, Foreign Investment, and Industrial Policy for Developing Countries.” NBER Working Paper.
Irwin, Douglas. 1997. “From Smoot-Hawley to Reciprocal Agreements: Changing the Course of U.S. Trade Policy in the 1930s.” NBER Working Paper.
Irwin, Douglas. 1998. “The Smoot-Hawley Tariff: A Quantitative Assessment.” The Review of Economic Statistics.
Crowley, Meredith A. and Xi Luo. 2011. “Understanding the Great Trade Collapse of 2008-09 and the Subsequent Trade Recovery.” Journal of Economic Perspectives.
Gopinath, Gita and Oleg Itskhoki. 2009. “Trade Prices and the Global Trade Collapse of 2008-2009.” NBER Working Paper.
Francois, Joseph and Julia Woerz. 2009. “The Big Drop: Trade and the Great Recession.” No Journal, article online.
Videos: Corn Law debates, Friedrich List, Robert Torrens on sliding tariffs, The deindustrialization of India, Tariffs and Growth in the late 19th Century, South Korea and Industrial Policy, The Smoot-Hawley Tariff, Why Did Trade Plummet in the Great Recession?
VII. FDI and multinationals
Blonigen, Bruce A. 2005. “A Review of the Empirical Literature on FDI Determinants.” NBER Working Paper.
Ramondo, Natalia and Andres Rodriguez-Clare. 2009. “Trade, Multinational Production, and the Gains from Openness.” NBER Working Paper.
Antras, Pol and Stephen R. Yeaple. 2013. “Multinational Firms and the Structure of International Trade.” NBER Working Paper.
Videos: Basics of multinational corporations, Intra-firm Trade, Intra-industry Trade, Gains from Multinationals, Who Gains from FDI?, Productivity in firms, Foreign investment in India, Competition from foreign retailers, What is a Maquiladora? Introduction to NAFTA, NAFTA and Mexican Agriculture, The Effect of NAFTA on the Mexican Economy.
VIII. The politics of trade
Grossman, Gene M. and Elhanan Helpman. 1994. “Protection for Sale.” American Economic Review.
Goldberg, Pinelopi Koujianou and Giovanni Maggi. 1999. “Protection for Sale: An Empirical Investigation.” American Economic Review.
Mayda, Anna Maria and Dani Rodrik. 2005. “What are Some People (and Countries) More Protectionist than Others?” European Economic Review.
Grossman, Gene M. and Elhanan Helpman. 1995. “The Politics of Free-Trade Agreements.” American Economic Review.
Harrison, Ann and Jason Scorse. 2010. “Multinational and Anti-Sweatshop Activism.” American Economic Review.
Videos: The Political Economy of Tariffs, Does Trade Help the Environment?, Regulation as a Major Trade Barrier, Who Supports Free Trade?, The Cultural Diversity Critique of Markets.
Assorted links
1. Scott Sumner speaks up for China, and Scott on movies.
2. On Finnish “preschool by any other name,” my previous post was wrong on this topic.
3. Paul Romer is on Twitter; so far he seems to be taking it seriously.
4. FDI performance for France, better than you might think but can it last?
5. How easily can the Fed back out of its portfolio? Sober Look and Arnold Kling.
6. Jobs where the gender wage gap is largest and smallest. And do the costs of minimum wage hikes fall mainly on outsiders?
7. How the Italian Senate works (doesn’t work), further explanation here, and why there was no real alternative to Monti’s Italian austerity.
Our obsession with growth rates, by Scott Winship
Many MR readers have asked for commentary on this very interesting piece by Scott Winship. Scott makes a number of points but here is one in particular:
As nations become wealthier, it is harder for them to sustain high rates of growth. That doesn’t mean that the United States is in decline, or even stagnating. When a nation is as rich as ours, it can realize larger absolute gains than it did in the past and larger gains than other nations even if it has lower growth rates. That’s because a growth rate of, say, 2.5 percent represents a larger increase in absolute wealth the richer an economy becomes. In 1900, a 2.5 percent increase in gross domestic product (GDP) per capita would have translated into about $150 in today’s dollars for every man, woman, and child in the United States. In 2010, it would have been roughly $1,200, reflecting the fact that in the aggregate, we are about eight times wealthier than we were 110 years ago.3 By focusing too much on growth rates and too little on absolute increases in wealth, we have failed to appreciate the magnitude of economic gains in recent decades.
A few remarks in response:
1. First, this is not so far from my own view, for instance Scott cites me as writing: “Life is better and we have more stuff, but the pace of change has slowed down compared to what people saw two or three generations ago.”
2. I still think this — to the extent it is true — is tragic. Just imagine the future potential loss that would result from the disappearance of compound growth. People one hundred years out would be much worse off, relative to exponential growth, and their ability to fix the environment or elevate poor countries to wealth, also will be much lower. In essence economics would be surrendering the gain it won from the victory over Malthus. “Hey, Reverend, you were right, growth will be only an arithmetical progression, not geometric as we had thought from 18?? through to 19??. But you were wrong about one other thing: the populations of many of the best countries in the world are shrinking!” I find that response horrible and depressing, not heartening.
3. Many features of our budgeting, especially from the public sector, rely on exponential rates of economic growth. For better or worse, we are not about to back our way out of those. We also may need exponential growth to pay off the growing power of special interest groups.
4. Most importantly, I think high rates of economic growth will resume, at some (unknown) date in the future. Note that in a very broad data sample, stretching across centuries, rates of growth for the technological leaders are on average rising, as shown by Paul Romer. It was a big deal in the 17th century when England started to manage an average of about one percent growth a year, but today we would call that a kind of stagnation. The Great Stagnation is a temporary slowdown in growth, not the permanent end of new ideas.
A Trapped Factors Model of Innovation
That is the new paper (pdf) by Nicholas Bloom, Paul Romer, Stephen Terry and John Van Reenen. Here is the abstract:
When will reducing trade barriers against a low wage country cause innovation to increase in high wage regions like the US or EU? We develop a model where factors of production have costs of adjustment and so are partially “trapped” in producing old goods. Trade liberalization with a low wage country reduces the profitability of old goods and so the opportunity cost of innovating falls. Interestingly, the “China shock” is more likely to induce innovation than liberalization with high wage countries. These implications are consistent with a range of recent empirical evidence on the impact of China and offers a new mechanism for positive welfare effects of trade liberalization over and above the standard benefits of specialization and market expansion. Calibrations of our model to the recent experience of the US with China suggests that there will be faster long-run growth through innovation in the US and that, in the short run, this is magnified by the trapped factor effect.
The Foreign Policy Top Global Thinkers
You will find it here, Scott Sumner makes the list, as do Piketty and Saez and many others, including Buiter, Krugman, Roubini, Feldstein, Duflo, Acemoglu, Zingales, and Paul Romer. Ruchir Sharma too.
Handicapping the 2012 Nobel
This article mentions Alvin Roth, Bob Shiller, Richard Thaler, Robert Barro, Lars Hansen, Anthony Atkinson, Angus Deaton, Jean Tirole, Stephen Ross, and William Nordhaus.
I’ll predict a triple prize to Shiller, Thaler, and Eugene Fama. Fama clearly deserves it, can’t win it solo (too strongly EMH in an age of financial crisis), but can be bundled with two people from behavioral finance and irrational exuberance theories.
Barro will get it, but not in an election year. Hansen and Ross are good picks but I don’t see them getting it before Fama does. Paul Romer deserves mention but this is probably not his year because of politics in Honduras.
William Baumol cannot be ruled out. A neat idea — but unlikely — is Martin Feldstein and Joseph Newhouse for their pioneering work in health care economics, plus for Feldstein there is public finance too.
Tirole and Nordhaus are deserving perennials, with various bundlings (e.g., Oliver Hart, or for Nordhaus other names in environmental). I hope the Krueger-Tullock idea is not dead but I would bet against it, same with Armen Alchian and Albert Hirschman. Dale Jorgensen has a shot.
I believe Duflo and Banerjee (and possibly Michael Kremer too, maybe even Robert Townsend) will get it sooner than people are expecting, though not this year as they just presented in Stockholm. Next year I think.
Not once in the past have I been right about this.
Addendum: Here is the talk from Northwestern.