Trade, product variety and welfare: a quantitative assessment for mainland China

Funke, Michael; Ruhwedel, Ralf

doi:10.1080/17538960802076695

Cited by 2 publications

(1 citation statement)

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“…Admittedly, this is not the first paper that pursues this direction. Funke and Ruhwedel (2008) provided the first quantitative assessment of China's gains from import variety using six‐digit harmonized system (HS) products for 1993–2003. However, they defined variety growth as the extensive margin following Hummels and Klenow (2005), which is more suitable for cross‐sectional data.…”

Section: Introductionmentioning

confidence: 99%

Import Variety and Welfare Gain in China

Chen

2012

Rev International Economics

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This paper provides the first comprehensive measure of how much China has gained from import variety from 1997 to 2008, by adopting a simplified trade restrictiveness index. Utilizing the most disaggregated product‐level import data available for China, the paper finds that the welfare gain as a result of new import variety amounts to 4.9% of gross domestic product (GDP), or 0.4% annually, after controlling for the prevalent imported intermediate inputs for processing. Furthermore, the empirical strategy is extended to investigate specific contributions of different countries, and finds that China gains the most from Japan, followed by Canada and Germany. Countries with abundant natural resources, such as Indonesia, Russia, Iran, and Australia, also contribute significantly to China's welfare.

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Section: Introductionmentioning

confidence: 99%

Import Variety and Welfare Gain in China

Chen

2012

Rev International Economics

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The intensive and the extensive margins: not only an international issue

Arespa

2013

Port Econ J

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Empirical evidence shows that quantity (intensive margin) and variety availability (extensive margin) have effects of different magnitude on populations' welfare. Indeed, the pattern of a market dynamics may cause changes in welfare inequality. Low income consumers benefit more from quantity than high income consumers, who are more interested in enjoying variety. These facts have been usually addressed as consequences of trade liberalization by international trade theory. However, market dynamics are also present within the borders of every country. It is important to understand what forces, unrelated with international trade, affect these dynamics. This paper explores the transmission of different real shocks into market dynamics in a new-Keynesian closed economy. Results show that the source of the shock is crucial to determine the magnitude and direction of the effects on each margin.

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Trade, product variety and welfare: a quantitative assessment for mainland China

Cited by 2 publications

References 12 publications

Import Variety and Welfare Gain in China

Import Variety and Welfare Gain in China

The intensive and the extensive margins: not only an international issue

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