Trade Integration, Firm Selection And The Costs Of Non-Europe

Topics:
Organization
Tags:
European Union,
Integration,
Selection,
University Of Bologna
Source:
University of Bologna

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Overview: In models with heterogeneous firms trade integration has a positive impact on aggregate productivity through the selection of the best firms as import competition drives the least productive ones out of the market. To quantify the impact of firm selection a multi-country multi-sector model with monopolistic competition and variable markups using firm-level data and aggregate trade figures is calibrate and simulate on a panel of 11 EU countries. It is found that EU trade has a sizeable impact on aggregate productivity. Productivity losses, however, vary a lot across countries and sectors depending on market accessibility and trade costs. Evidence is provided that our results are robust to alternative distance and productivity measures.

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Format: PDF | Size: 937KB | Date: Jan 2006 | Pages: 31

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