Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade

Adão, Rodrigo; Costinot, Arnaud; Donaldson, Dave

doi:10.1257/aer.20150956

Cited by 130 publications

(132 citation statements)

References 81 publications

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“…Additional Parameters: For the value of the trade elasticity for flows of goods, we use the estimate θ = 6.1 from Adao, Costinot, and Donaldson (2017). This estimate is also in line with other existing estimates reported in the literature (Head and Mayer 2014).…”

Section: Regional Data and Measurement Errormentioning

confidence: 76%

Tourism and Economic Development: Evidence from Mexico’s Coastline

Faber

Gaubert

2019

American Economic Review

154

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Tourism is a fast-growing services sector in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to study the long-term economic consequences of tourism both locally and in the aggregate. We find that tourism causes large and significant local economic gains relative to less touristic regions that are in part driven by significant positive spillovers on manufacturing. In the aggregate, however, these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions, so that the national gains from trade in tourism are mainly driven by a classical market integration effect. (JEL L60, L83, O14, O18, R11, Z31, Z32)A conventional view in the literature on economic growth and development is that the production of traded goods is subject to dynamic productivity improvements, whereas the services sector is perceived to be more stagnant. 1 In line with this view, the locus of agglomeration economies is generally assumed to be the manufacturing sector, rather than services. This asymmetry has important implications for the growth strategies of developing countries, and whether they should prioritize the development of traded goods producing sectors. At the same time, there is relatively little empirical evidence on the economic consequences of the development of the services sector in developing countries, and whether the reallocation of factors of production into services can give rise to adverse long-term effects both locally and in the aggregate. 2 This paper sets out to study the economic consequences of tourism, a fast-growing services sector in developing countries. Tourism involves the export of otherwise non-traded local services by temporarily moving consumers across space, rather than 1 This view is in the tradition of Baumol (1967). See Herrendorf, Rogerson, and Valentinyi (2014) for a review of the recent literature, and McMillan and Rodrik (2011) for an analysis in the context of developing countries. 2 See, for example, Copeland (1991) for an early theoretical discussion of tourism as a potential "Dutch disease."

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Section: Regional Data and Measurement Errormentioning

confidence: 76%

Tourism and Economic Development: Evidence from Mexico’s Coastline

Faber

Gaubert

2019

American Economic Review

154

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“…While Giri et al (2020) argue that the bias from using homogeneous elasticities is only small (between 10 and 20%), we show that this average gure masks considerable heterogeneity across countries at a given level of development, and that there is an inverse relation between the size of the bias and importer development level. Our ndings are related to the generalization of the CES assumption by Adao, Costinot & Donaldson (2017), in which the demand elasticity varies systematically by observable country characteristics, e.g. income per capita (the mixed CES demand system).…”

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confidence: 90%

Product-Level Trade Elasticities

2019

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Trade elasticity is a crucial parameter in evaluating the welfare impacts of trade liberalization. We estimate trade elasticities at the product level (6-digit of the Harmonized System) by exploiting the variation in bilateral applied tariffs for each product category. The obtained trade elasticities are centered around-5. We show that using homogeneous-instead of product-specific-trade elasticity implies a downward bias in welfare gains from trade in particular for developing countries.

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“…Successful adaptation involves tailoring to individual needs, a series of modifications, and the improvement of technology to change resources and meet the increasing needs of developing countries (Adao et al, 2017;Vasa et al, 2012). Developing countries can be considered passive technology importers.…”

Section: Literature Review Of the Nexus Between Icts And Productivitymentioning

confidence: 99%