Revealing Ricardian Comparative Advantage with Micro and Macro Data
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SeriesResearch on Monday
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Speaker(s)Gianmarco Ottaviano (Bocconi University, Italy)
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FieldMacroeconomics
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LocationErasmus University Rotterdam, Polak 2-18
Rotterdam -
Date and time
February 12, 2024
11:30 - 12:30
Abstract
We propose a sufficient statistics approach to
measuring Ricardian comparative advantage in a quantitative trade model
featuring cross-country differences in productivity, factor prices, market
size, as well as monopolistic competition, endogenous markups, and firm
heterogeneity. The model’s micro-foundations do not necessarily imply that the
relevant data for the proposed sufficient statistics must include micro
information, but its micro-structure is needed to understand how only macro
information can be used instead. Applying the approach to Chinese microdata and
cross-country macrodata, we show that imperfect competition with endogenous
markups and firm heterogeneity have far-reaching implications for correctly
measuring Ricardian comparative advantage.