Trade Theory with Numbers: Quantifying the Consequences of Globalization

By Arnaud Costinot, A. Rodríguez-Clare. 2013

923 citations recorded by the source corpus.

We review a recent body of theoretical work that aims to put numbers on the consequences of globalization. A unifying theme of our survey is methodological. We rely on gravity models and demonstrate how they can be used for counterfactual analysis. We highlight how various economic considerations--market structure, firm-level heterogeneity, multiple sectors, intermediate goods, and multiple factors of production--affect the magnitude of the gains from trade liberalization. We conclude by discussing a number of outstanding issues in the literature as well as alternative approaches for quantifying the consequences of globalization.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d1e349bcfa1e832def444e187f6fa3f9c4813727

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Citations in the corpus

On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration (2019, neutral): “Our starting point is a simple, generalized version of the “structural gravity” equation, as originally derived by Anderson (1979) and as popularized by Eaton & Kortum (2002) and Anderson & van 5This idea has been explored in the context of FTAs by Dai et al. (2014) and by Bergstrand et al.”
The costs and benefits of leaving the EU: trade effects (2017, background): “For instance, in a recent survey paper, Costinot and Rodriguez-Clare (2014) show that the gains from trade for the UK can range from 3% to over 23% depending on the details of the model used.”
Brexit and the macroeconomic impact of trade policy uncertainty (2019, background): “I set this parameter so that the model’s long-run trade elasticity is 5 (Costinot and Rodrı́guez-Clare, 2014; Caliendo and Parro, 2015).”
Estimating the effects of non‐discriminatory trade policies within structural gravity models (2017, neutral): “We refer the reader to Eaton and Kortum (2002), Anderson and van Wincoop (2003), Broda et al.”
Intra-national trade costs: Assaying regional frictions (2019, background): “Column (4) of Table 4 reports the results from the translog specification in equation (16).”
Why trade matters after all (2015, methodology): “However, recent calculations by Costinot and Rodriguez-Clare (2014) suggest that even with multiple industries the gains from trade are quite similar in “old” and “new” trade models.”
Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route (2018, background): “14It is important to note that recent quantitative trade models –summarized by Costinot and Rodríguez-Clare (2013)– are not able to handle the current exercise. These micro-theory based econometric models are highly stylized quantification methods, that however, are not capable of dealing with detai”
Trade, Migration, and Productivity: A Quantitative Analysis of China (2019, methodology): “To ease our quantitative analysis and calibration, we follow Dekle, Eaton and Kortum (2007) and express counterfactual values relative to initial equilibrium values.”