The Intensive Margin in Trade

Fernandes, Ana M.; Klenow, Peter J.; Meleshchuk, Sergii; Pierola, Martha Denisse; Rodrı́guez-Clare, Andrés

doi:10.5089/9781484386170.001

Cited by 9 publications

(10 citation statements)

References 29 publications

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“…() and Fernandes et al. () assumes that the underlying labour productivity φ is drawn from a log‐normal distribution,

\log N (m, υ^{2})

. In this case,

e^{z_{italicij}}

equals φ ε −1 , and

z_{ij}

follows a normal distribution,

N (μ, σ^{2})

where μ = m ( ε −1) and σ 2 = υ 2 ( ε −1) 2 .…”

Section: Theoretical Trade Elasticitymentioning

confidence: 99%

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The double EMG distribution and trade elasticities

Sager

Timoshenko

2019

Canadian J of Economics

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Using Brazilian export data that, unlike many trade data sets, have a full record of small export sales, this paper reconsiders trade elasticities and the welfare gains from trade. Using the Brazilian data, this paper provides novel evidence on the properties of the distributions of log-export sales and shows that the double exponentially modified Gaussian (EMG) distribution parsimoniously captures these properties. Using the double EMG distribution in a standard monopolistic competition model of trade, this paper demonstrates that data truncation, which is prevalent in many data sets, leads to an upward bias in measuring the partial elasticity of trade with respect to variable trade costs. This bias subsequently leads to the underestimation of the gains from trade by 1% to 9% depending on the extent of data truncation, a range that is commensurate with typical economic growth and large booms.Résumé. Double distribution gaussienne modifiée de façon exponentielle (EMG) et élasticités commerciales. En s'appuyant sur les données relatives aux exportations brésiliennes consignant, contrairement à de nombreux autres ensembles de données, tous les volumes de ventes à l'exportation y compris les plus petits, cet article réexamine l'élasticité des échanges et les bienfaits sociaux en découlant. Grâce à ces données, l'article offre un nouvel éclairage sur les propriétés des distributions relatives aux ventes à l'exportation consignées, et montre que la double distribution gaussienne modifiée de façon exponentielle (EMG) ne reflète que partiellement ces propriétés. En utilisant cette double distribution dans un modèle commercial standard caractérisé par une concurrence monopolistique, cet article démontre que la troncature des données, fréquente dans de nombreux ensembles de données, génère des erreurs systématiques par excès lorsque l'on mesure l'élasticité partielle des échanges par rapport aux coûts commerciaux variables.

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“…() and Fernandes et al. () assumes that the underlying labour productivity φ is drawn from a log‐normal distribution,

\log N (m, υ^{2})

. In this case,

e^{z_{italicij}}

equals φ ε −1 , and

z_{ij}

follows a normal distribution,

N (μ, σ^{2})

where μ = m ( ε −1) and σ 2 = υ 2 ( ε −1) 2 .…”

Section: Theoretical Trade Elasticitymentioning

confidence: 99%

“…Second, we follow Fernandes et al. () in requiring at least 100 firms be present within a destination–year observation.…”

mentioning

confidence: 99%

The double EMG distribution and trade elasticities

Sager

Timoshenko

2019

Canadian J of Economics

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“…I match the production data to US export data at the 6-digit NAICS level for the same destination countries as the bilateral trade data. 12 As documented by works like Armenter and Koren (2014), Fernandes et al (2015), and Alessandria et al (2010), international trade data often suffers from issues of sparseness and lumpiness in monthly and annual shipments. To smooth these anomalies, I use a 3-year average to control for reporting errors in the timing of shipments, or instances of shipment and customs reports being dispersed over multiple years.…”

Section: Data Sourcesmentioning

confidence: 99%

Decomposing episodes of large growth in international trade

Malloy

2020

Rev International Economics

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Over the past 50 years, international trade has grown nearly twice as fast as world GDP. 1 For most countries, this growth has not been smooth and constant over time, but rather occurred over a small number of rapid growth episodes. For some countries, episodes of large growth follow implementations of trade liberalization, such as the North American Free Trade Agreement (NAFTA) in the early 1990s. However, episodes of large trade growth also occur in the absence of formal trade

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“…Two main developments stand out in the growing literature on trade and economic development: More papers now focus on the dynamics of trade, and more scholars now show the separate contributions of the intensive and extensive margins to export growth—how incumbents, exiters and entrants shape aggregate export values (e.g., Díez, Mora, and Spearot 2018; Fernandes, Freund, and Pierola 2016). The literature has grown, expanding from early papers on high‐income economies (e.g., Bernard et al 2007; Eaton, Kortum, and Kramarz 2011), to recent papers that cover countries with a broader range of gross domestic product (GDP) per capita (e.g., Fernandes et al 2015; Fernandes, Freund, and Pierola 2016; Freund and Pierola 2015). This growing literature on trade dynamics suggests that economic development, as measured by GDP per capita, plays a role in supporting exports, so that we observe large differences between the export profiles of high‐income countries and the least developed countries.…”

Section: Introductionmentioning

confidence: 99%

“…The shape of firm‐size distributions matter, as long as increasing GDP per capita is linked to institutional changes that lower trade costs. As part of the debate, Fernandes et al (2015) develop a Melitz‐style model of exporting, but with a log‐normal distribution of productivity. With this innovation, half of the variation in exports is expected to occur along the intensive margin, (as opposed to how the extensive margin explains all the variation in exports in a Melitz–Pareto model).…”

Section: Introductionmentioning

confidence: 99%

Economic Development and the Margins of Trade: Are the Least Developed Countries Different?

Mora

Olabisi

2020

Economic Inquiry

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We show that for the least‐developed countries (LDCs), the number of exporters is relatively more important than the average exporter size for explaining both export growth and economic development. To guide our analysis, we develop a theoretical model that links the impact of productivity shocks to institutional differences between country groups. Empirically, we find a positive relationship between the extensive margin and economic development for LDCs, but not for middle‐income and high‐income economies; and, on the intensive margin, the relationship is strongest for high‐income countries. The findings imply that the drivers of export growth and economic development for the poorest countries differ significantly from growth drivers in other country groups.( JEL F12, F43, O47)

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The Intensive Margin in Trade

Abstract: Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Cited by 9 publications

References 29 publications

The double EMG distribution and trade elasticities

The double EMG distribution and trade elasticities

Decomposing episodes of large growth in international trade

Economic Development and the Margins of Trade: Are the Least Developed Countries Different?

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