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Seminar

Revealing Ricardian Comparative Advantage with Micro and Macro Data


  • Series
    Research on Monday
  • Speaker(s)
    Gianmarco Ottaviano (Bocconi University, Italy)
  • Field
    Macroeconomics
  • Location
    Erasmus 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.