The elasticity of trade: Estimates and evidence

Abstract

for their hospitality and financial support through the Peter B. Kenen fellowship. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Capital Goods Trade and Economic Development

“…We estimate θ for (i) all manufactured goods (producer durables + intermediate goods), (ii) only intermediate goods, and (iii) only producer durables. Our estimate for all manufactured goods is 3.7 (Simonovska and Waugh, 2014, obtain an estimate of 4). Our estimate for the capital goods sector is 4.3; for the intermediate goods sector it is 4.…”

“…We follow the procedure of Simonovska and Waugh (2014) to estimate θ (see Appendix C for a description of their methodology). We estimate θ for (i) all manufactured goods (producer durables + intermediate goods), (ii) only intermediate goods, and (iii) only producer durables.…”

“…C Estimation of θ Simonovska and Waugh (2014) build on the procedure in Eaton and Kortum (2002). We refer to these papers as SW and EK henceforth.…”

The role of direct flights in trade costs

“…Since the largest observed price di¤erence between locations provides information about the limit that the arbitrage condition imposes, the recent literature has estimated trade costs using inequality moments. Examples of this strategy include the intercity price analysis study by Borraz et al (2014) using the price data obtained by the Billion Prices Project at MIT, together with international trade studies by Eaton and Kortum (2002), Simonovska and Waugh (2014), among many others, in the literature. 5 One problem with this strategy is that retail prices of traded goods consist of both traded and non-traded input prices, where the latter mostly refers to local distribution costs.…”

Comparative Advantage in Innovation and Production

“…32 In this sense, Lemma 2 provides a theoretical threshold for the parameter above which the endogenous adjustments in technology are strong enough to allow for the possibility of home market e¤ects and potential reversals in the export pro…le of countries.…”