Speaker: Laruence M. Ball a professor of economics at Johns Hopkins University, a Research Associate of the National Bureau of Economic Research and a Visiting Scholar at the International Monetary Fund. His research focuses on unemployment, inflation, and fiscal and monetary policy. He is the author of Money, Banking, and Financial Markets (Worth Publishers, second edition 2012). More >>
Abstract: Comparative advantage and trade costs shape the geography of cross-border supply chains and trade flows. To quantify these forces, we build a model of trade with multi-stage production that features technology differences both across and within individual production stages. We estimate technology and trade costs in the model via simulated method of moments, matching bilateral shipments of final and intermediate goods. Using the estimated model, we investigate the extent to which supply chains magnify trade elasticities, and study how supply chain comparative advantage and trade costs influence the final vs. intermediate composition of trade and intensive/extensive margin adjustment to shocks. We find minimal magnification effects for moderate changes in trade costs. In contrast, we do find that multi-stage production helps explain stylized facts about trade composition and margins of adjustment.
This talk held jointly with the International Monetary Fund.
Last Updated: Oct 23, 2014