Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67339
Authors: 
Segerstrom, Paul S.
Stepanok, Ignat
Year of Publication: 
2012
Series/Report no.: 
Kiel Working Paper 1801
Abstract: 
In this paper, we present a standard quality ladders endogenous growth model with one significant new assumption, that it takes time for firms to learn how to export. We show that this model without Melitz-type assumptions can account for all the evidence that the Melitz (2003) model was designed to explain plus much evidence that the Melitz model can not account for. In particular, consistent with the empirical evidence we find that trade liberalization leads to a higher exit rate of firms, that exporters charge higher prices for their products as well as higher markups, and that many large firms do not export. We also find that trade iberalization promotes economic growth and that it has the opposite effect of retarding economic growth in a closely comparable growth model with Melitz-type assumptions.
Subjects: 
trade liberalization
heterogeneous firms
quality ladders
endogenous growth
JEL: 
F12
F13
F43
O31
O41
Document Type: 
Working Paper

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