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Title:Tradability, productivity, and understanding international economic integration PDF Logo
Authors:Bergin, Paul
Glick, Reuven
Issue Date:2005
Series/Report no.:Working papers // University of California, Department of Economics 05,14
Abstract:This paper develops a two-country macro model with endogenous tradability to study features of international economic integration. Recent episodes of integration in Europe and North America suggest some surprising observations: while quantities of trade have increased significantly, especially along the extensive margin of goods previously not traded, price dispersion has not decreased and may even have increased. These observations challenge the usual understanding of integration in the literature. We propose a way of reconciling these price and quantity observations in a macroeconomic model where the decision of heterogeneous firms to trade internationally is endogenous. Trade is shaped both by the nature of heterogeneity
Subjects:trade costs versus productivity
JEL:F40
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, UC Davis

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