Networks, Barriers, and Trade

By D. Baqaee, Emmanuel Farhi. Econometrica, 2019

168 citations recorded by the source corpus.

We study a flexible class of trade models with international production networks and arbitrary wedge‐like distortions like markups, tariffs, or nominal rigidities. We characterize the general equilibrium response of variables to shocks in terms of microeconomic statistics. Our results are useful for decomposing the sources of real GDP and welfare growth, and for computing counterfactuals. Using the same set of microeconomic sufficient statistics, we also characterize societal losses from increases in tariffs and iceberg trade costs and dissect the qualitative and quantitative importance of accounting for disaggregated details. Our results, which can be used to compute approximate and exact counterfactuals, provide an analytical toolbox for studying large‐scale trade models and help to bridge the gap between computation and theory.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/ec448d98021a11eea9dca214528808560430ec1d

Citations in the corpus

• Productivity and Misallocation in General Equilibrium* (2017, unknown): “(2013), Rognlie (2016), Barkai (2019), Caballero et al.”
• Sectoral Effects of Social Distancing (2020, unknown): “, 2012; Baqaee and Farhi, 2019), with applications for public policies (Grassi and Sauvagnat, 2019). For a recent review, see Carvalho and Tahbaz-Salehi (2018). We build on the findings of this literature and analyze the effects of social distancing in production networks.”