Tariffs, trade and productivity: A quantitative evaluation of heterogeneous firm models

Holger Breinlich, Alejandro Cunat

Publications: Contribution to journalArticlePeer Reviewed

Abstract

We examine the quantitative predictions of heterogeneous firm in the context of the Canada-US Free Trade Agreement (CUSFTA) of 1989. We compute predicted increases in trade flows and measured productivity and compare them to the post-CUSFTA increases observed in the data. Most models predict increases in measured productivity that are too low by an order of magnitude relative to predicted increases in trade flows. A multi-product firm extension that allows for within-firm productivity increases has the potential to reconcile model predictions with the data.

Original languageEnglish
Pages (from-to)1660-1702
Number of pages43
JournalThe Economic Journal
Volume126
Issue number595
DOIs
Publication statusPublished - 1 Sep 2016

Austrian Fields of Science 2012

  • 502003 Foreign trade

Keywords

  • CMI
  • Cat1
  • VWL
  • IMPACT
  • GAINS
  • INCREASING RETURNS
  • INTERNATIONAL-TRADE
  • PATTERN
  • DIFFERENTIATION
  • LIBERALIZATION
  • TECHNOLOGY

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