Data and Code for: Misallocation Under Trade Liberalization

Principal Investigator(s):  View help for Principal Investigator(s) Yan Bai, University of Rochester; Keyu Jin, London School of Economics; Dan Lu, Chinese University of Hong Kong

Version:  View help for Version V1

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  Data_MatlabCode 03/20/2024 04:57:PM
README.pdf application/pdf 279.7 KB 05/23/2024 06:21:PM

Project Citation: 

Bai, Yan, Jin, Keyu , and Lu, Dan. Data and Code for: Misallocation Under Trade Liberalization. Nashville, TN: American Economic Association [publisher], 2024. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2024-05-29. https://doi.org/10.3886/E195946V1

Project Description

Summary:  View help for Summary
This paper formalises a classic idea that in second-best environments trade can induce welfare losses: incremental income losses from distortions can outweigh trade gains. In a Melitz model with distortionary taxes, we derive sufficient statistics for welfare gains/losses, and show that departures from the efficient case (ACR) can be captured by the gap between an input and output share and domestic extensive margin elasticities. The loss reflects an endogenous selection of more subsidized firms into exporting. Using Chinese manufacturing data in 2005 and model-inferred firm-level distortions, we demonstrate that a sizeable negative fiscal externality can potentially offset conventional gains.
Funding Sources:  View help for Funding Sources ESRC award (P004253/1); NSFC/RGC Collaborative Research Scheme (CRS_CUHK405/22)

Scope of Project

JEL Classification:  View help for JEL Classification
      E23 Macroeconomics: Production
      F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
      F14 Empirical Studies of Trade
      F63 Economic Impacts of Globalization: Economic Development
      L25 Firm Performance: Size, Diversification, and Scope
      O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Geographic Coverage:  View help for Geographic Coverage China, US
Time Period(s):  View help for Time Period(s) 1998 – 2007
Universe:  View help for Universe Non-state firms with sales over 5 million RMB (about 600,000 US dollars) and all of the state firms for the 1998-2007 period in China
Data Type(s):  View help for Data Type(s) survey data

Methodology

Sampling:  View help for Sampling
Non-state firms with sales over 5 million RMB (about 600,000 US dollars) and all of the state firms for the 1998-2007 period in China
Data Source:  View help for Data Source
Annual survey of manufacturing enterprises collected by the Chinese National Bureau of Statistics, 1998-2007

Unit(s) of Observation:  View help for Unit(s) of Observation firms

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Published Versions

V1 [2024-05-29]

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