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Regular version of the site
Of all publications in the section: 8
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Article
Behrens K., Lamorgese A., Ottaviano G. et al. Journal of International Economics. 2009. No. 79. P. 259-265.
Added: Nov 23, 2013
Article
Tarasov A. Journal of International Economics. 2012. Vol. 86. No. 2. P. 284-294.

There is strong empirical evidence that countries with lower per capita income tend to have smaller trade volumes even after controlling for aggregate income. Furthermore, poorer countries do not just trade less, but have a lower number of trading partners. In this paper, I construct and estimate a general equilibrium model of trade that captures both these features of the trade data. The key element of the model is an association between trade costs (both variable and fixed) and countries' development levels, which can account for the effect of per capita income on trade volumes and explain many zeros in bilateral trade flows. I find that market access costs play an important role in fitting the model to the data. In a counterfactual analysis, I find that removing the asymmetries in trade costs raises welfare in all countries with an average percentage change equal to 29% and larger gains for smaller and poorer countries. Real income inequality falls by 43%.

Added: Oct 2, 2015
Article
Behrens K., Murata Y. Journal of International Economics. 2012. No. 87. P. 1-17.

We present a general equilibrium model of monopolistic competition featuring pro-competitive effects and a competitive limit, and investigate the impact of trade on welfare and efficiency. Contrary to the constant elasticity case, in which all gains from trade are due to product diversity, our model allows for a welfare decomposition between gains from product diversity and gains from pro-competitive effects. We show that the market outcome is not efficient because too many firms operate at an inefficiently small scale by charging too high markups. We further illustrate that trade raises efficiency by narrowing the gap between the equilibrium utility and the optimal utility. As the population gets arbitrarily large in the integrated economy, the equilibrium utility converges to the optimal utility because of the competitive limit. We finally extend the variable elasticity model to a multi-sector setting, and show that intersectoral distortions are eliminated in the limit. The multi-sector model allows us to illustrate some new aspects arising from intersectoral and intrasectoral allocations, namely that trade leads to structural convergence, rather than sectoral specialization, and that trade induces domestic exit in the nontraded sector.

Added: Nov 23, 2013
Article
Seitz M., Tarasov A., Zakharenko R. Journal of International Economics. 2015. Vol. 95. No. 2. P. 305-318.

This paper develops a quantitative model of trade, military conflicts, and defense spending. Lowering trade costs between two countries reduces probability of an armed conflict between them, causing both to cut defense spending. This in turn causes a domino effect on defense spending by other countries. As a result, both countries and the rest of the world are better off. We estimate the model using data on trade, conflicts, and military spending. We find that, after reduction of costs of trade between a pair of hostile countries, the welfare effect of worldwide defense spending cuts is comparable in magnitude to the direct welfare gains from trade.

Added: Oct 2, 2015
Article
Zakharenko R., Seitz M., Тарасов А. Journal of International Economics. 2015. Vol. 95. No. 2. P. 305-318.

This paper develops a quantitative model of trade, military con icts, and defense spending. Trade liberalization between two countries reduces probability of an armed con ict between them, causing both to cut defense spending. This in turn causes a domino e ect on defense spending by other countries. As a result, both countries and the rest of the world are better o . We estimate the model using data on trade, con icts, and military spending. We nd that, after reduction of costs of trade between a pair of hostile countries, the welfare e ect of worldwide defense spending cuts is comparable in magnitude to the direct welfare gains from trade.

Added: Dec 12, 2014
Article
Kichko S., Sergey Kokovin, Evgeny Zhelobodko. Journal of International Economics. 2014. No. 94. P. 129-142.

We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of sub- stitution. Firms' prots and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively abundant is a net exporter of the manu- factured good, although both rm sizes and prots are lower in this country than in the country where capital is relatively scarce. The pricing policy adopted by rms depends neither on capital endowment nor country asymme- try. It is determined by the nature of preferences: when demand elasticity increases (decreases) with consumption, rms practice dumping (reverse-dumping).

Added: Jun 19, 2014
Article
Celik L., Karabay B., McLaren J. Journal of International Economics. 2013. Vol. 91. No. 2. P. 179-190.

In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which is concentrated in one or more electoral districts. Each district is represented by a legislator in the Congress. Legislative process is modeled as a multilateral sequential bargaining game à la Baron and Ferejohn (1989). Some surprising results emerge: bargaining can be welfare-worsening for all participants; legislators may vote for bills that make their constituents worse off; identical industries will receive very different levels of tariff. The results pose a challenge to empirical work, since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations — some of them random realizations of mixed bargaining strategies.

Added: Sep 21, 2015
Article
Behrens K., Picard P. Journal of International Economics. 2011. No. 85. P. 280-291.
Added: Nov 23, 2013