Year: 2010
Type: article
Abstract: I develop a novel view of the trade frictions between rich and poor countries by arguing that to reconcile bilateral trade volumes and price data within a standard gravity model, the trade frictions between rich and poor countries must be systematically asymmetric, with poor countries facing higher costs to export relative to rich countries. I provide a method to model these asymmetries and demonstrate the merits of my approach relative to alternatives in the trade literature. I then argue that these trade frictions are quantitatively important to understanding the large differences in standards of living and total factor productivity across countries. (JEL F11, F13, F14, O19)
Source: American Economic Review
Author: Michael E Waugh
Institution: New York University
Language: English
Topic: Global trade and economics
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: green
OpenAlex ID: W2168960563