| Description |
1 online resource (67 pages) |
| Series |
IMF Working Paper ; WP/18/259 |
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IMF working paper ; WP/18/259.
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| Contents |
Cover; The Intensive Margin in Trade; 1. Introduction; 2. The Intensive Margin in the Data; 3. The Intensive Margin in the Melitz-Pareto Model; 4. The Intensive Margin in the Melitz-Lognormal Model; 5. Counterfactual Analysis; 6. Conclusion; References; Tables and Figures; Table; Table 1: Core Sample of EDD countries+China, years firm-level data is available; Table 2: IME regressions, core sample; Table 3: IME regression, small firms excluded, core sample; Table 4: IME regression, disaggregated within manufacturing, core sample; Table 5: Product-level IME regression, core sample |
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Table 6: Margins of trade and distanceTable 7: Trade costs and distance; Table 8: Fixed trade costs distance elasticity and granularity; Table 9: IME under granularity; Table 10: Number of firms and population; Table 11: Trade costs and distance, Melitz-lognormal model; Table 12: Estimates of dispersion, full Melitz-lognormal model; Table 13: Implied IME in full Melitz-lognormal model; Table 14: Implied trade costs in full Melitz-lognormal model; Figure; Figure 1: Intensive and Extensive margins of exporting; Figure 2: Intensive and Extensive margins of exporting, by industry |
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Figure 3: IME for each percentile, dataFigure 4: Manufacturing absorption and averaged exports per firm(destination fixed effects); Figure 5: Exports to largest destination and market entry; Figure 6: Model-implied fixed and variable trade costs and distance; Figure 7: Fixed product-level trade costs and distance; Figure 8: IME for each percentile, Pareto and granularity; Figure 9: Number of firms and population; Figure 10: IME for each percentile, lognormal; Figure 11: Fixed and variable trade costs and distance, lognormal; Figure 12: Full Melitz-lognormal model, pdf of log sales |
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Figure 13: Share of firms selling to destination X but not to destination YFigure 14: Correlation between log exports to top destinations; Figure 15: IME for each percentile, data and full Melitz-lognormal model; Figure 16: Gains from trade liberalization; Figure 17: Counterfactual changes in trade flows; Figure 18: Gains from asymmetric trade liberalization; Figure 19: Counterfactual changes in trade flows, asymmetric trade liberalization |
| Summary |
The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank's Exporter Dynamics Database (EDD) featuring firm-level exports from 50 countries, we find that around 50 percent of variation in exports is along the extensive margin-a quantitative victory for the Melitz framework. The remaining 50 percent on the intensive margin (exports per exporting firm) contradicts a special case of Melitz with Pareto-distributed firm productivity, which has become a tractable benchmark. This benchmark model predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners should occur on the extensive margin. We find that moving from a Pareto to a lognormal distribution allows the Melitz model to match the role of the intensive margin in the EDD. We use likelihood methods and the EDD to estimate a generalized Melitz model with a joint lognormal distribution for firm-level productivity, fixed costs and demand shifters, and use "exact hat algebra" to quantify the effects of a decline in trade costs on trade flows and welfare in the estimated model. The welfare effects turn out to be quite close to those in the standard Melitz-Pareto model when we choose the Pareto shape parameter to fit the average trade elasticity implied by our estimated Melitz-lognormal model, although there are significant differences regarding the effects on trade flows |
| Notes |
Print version record |
| Subject |
International trade -- Econometric models.
|
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Exports -- Costs -- Econometric models
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International trade -- Econometric models
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| Form |
Electronic book
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| Author |
Klenow, Peter J
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Meleshchuk, Sergii
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| ISBN |
9781484389522 |
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1484389522 |
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