scholarly journals Measuring the Unequal Gains from Trade *

2016 ◽  
Vol 131 (3) ◽  
pp. 1113-1180 ◽  
Author(s):  
Pablo D. Fajgelbaum ◽  
Amit K. Khandelwal
Keyword(s):  
International Trade ◽  
Gravity Equation ◽  
Relative Price ◽  
Gains From Trade ◽  
Price Changes ◽  
The Poor

Abstract Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a nonhomothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.

International Economic Institutions, Institutional Complementarities and Institutionalized Linkages. The International Trade Case

2011 ◽  
pp. 67-90
Author(s):  
Maurizio Mistri
Keyword(s):  
International Economic ◽  
International Trade ◽  
Institutional Economics ◽  
Procedural Knowledge ◽  
New Institutional Economics ◽  
Relative Price ◽  
Economic Institutions ◽  
Real Economy ◽  
Procedural Rationality ◽  
Institutional Complementarity

This paper analyses the forces at the base of the formation processes of international economic institutions following the fundamental New Institutional Economics (NIE) approach. In particular, the paper assumes that new international economic institutions respond to a principle of procedural rationality. This principle indicates that the formation of institutions takes place in an environment dominated by the bounded rationality of agents that produce institutions based on procedural knowledge accumulated over time. Particular attention is dedicated to the relationship between institutional innovation and economic growth. Specialized institutions stem from this relation, on par with the real economy, and generate more and more complex institutional systems. Within the institutionalist approach to the formation of institutions, the paper highlights Aoki's concepts on "institutionalized linkages" and "institutional complementarity"; these concepts are then correlated to Schelling's "strategy decomposition" concept; subsequently the forces that lead to institutional changes (Aoki and North) are analyzed. Specifically, in light of North's approach, conditions are analyzed that determine changes in institutions governing international trade relations deriving from changes in some structural dimensions such as relative price systems. These changes are possible since governments can renegotiate original agreements giving rise to compensations.

Demand for Value Added and Value-Added Exchange Rates

2017 ◽  
Vol 9 (4) ◽  
pp. 45-90 ◽  
Author(s):  
Rudolfs Bems ◽  
Robert C. Johnson
Keyword(s):  
Value Added ◽  
Relative Price ◽  
Real Effective Exchange Rate ◽  
Price Changes ◽  
Elasticity Of Demand ◽  
Cross Border ◽  
Expenditure Switching ◽  
Effective Exchange ◽  
Effective Exchange Rate

We examine how cross-border input linkages shape the response of demand for value added to international relative price changes. We define a novel value-added real effective exchange rate (REER), which aggregates bilateral value-added price changes. Spillovers via input linkages lower the sensitivity of the value-added REER to price changes by supply chain partners because they counterbalance demand-side expenditure switching. Input linkages also raise the price elasticity of demand relative to the conventional REER framework, making demand more sensitive to REER changes. Using global input-output data, we demonstrate that these conceptual insights are quantitatively important in a case study of European competitiveness. (JEL E31, F23, F31, L14)

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