Data and Code for: Profits, Scale Economies, and the Gains from Trade and Industrial Policy
Principal Investigator(s): View help for Principal Investigator(s) Ahmad Lashkaripour, Indiana University; Volodymyr Lugovskyy, Indiana University
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
|---|---|---|---|
| concordance | 08/10/2023 11:51:AM | ||
| confidential_data | 08/10/2023 11:24:AM | ||
| exchange_rate_report_boc | 08/10/2023 11:51:AM | ||
| internally_generated | 08/10/2023 11:51:AM | ||
| penn_world_tables | 08/10/2023 11:51:AM | ||
| temp | 08/10/2023 11:24:AM |
Project Description
Summary:
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This paper examines the efficacy of second-best trade restrictions at correcting misallocation in the domestic economy. To this end, we derive sufficient statistics formulas for first-best and second- best optimal policies in an important class of quantitative trade models where misallocation stems from scale economies or profit- generating markups. We then estimate the essential parameters of the model and apply our optimal policy formulas to quantify the ex-ante gains from trade and industrial policy among major countries. Our estimates reveal (i) that standalone trade policy measures are remarkably ineffective at correcting misallocation; (ii) unilateral adoption of corrective industrial policies is also ineffective as it leads to immiserizing growth; but (iii) industrial policies coordinated internationally via deep agreements are more transformative than any unilateral policy alternative.
Scope of Project
JEL Classification:
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F10 Trade: General
F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
F13 Trade Policy; International Trade Organizations
F14 Empirical Studies of Trade
L52 Industrial Policy; Sectoral Planning Methods
O19 International Linkages to Development; Role of International Organizations
F10 Trade: General
F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
F13 Trade Policy; International Trade Organizations
F14 Empirical Studies of Trade
L52 Industrial Policy; Sectoral Planning Methods
O19 International Linkages to Development; Role of International Organizations
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