Trade Models and Macroeconomics
Ray C. Fair ()
Additional contact information
Ray C. Fair: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/ray-fair
No 2214, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University
Abstract:
This paper discusses some macro links that are missing from trade models. A multicountry macroeconometric model is used to analyze the effects on the United States of increased import competition from China, an experiment that is common in the recent trade literature. In the macro story a fall in Chinese export prices is stimulative. Domestic prices fall, which increases real wage rates and real wealth, which increases household expenditures. In addition, the Fed may lower the interest rate because of the lower prices, which is stimulative. Trade models do not have these channels, and they likely overestimate the negative effects or underestimate the positive effects on total output and employment from increased Chinese import competition. They lack some important aggregate demand channels, which are not likely second order.
Keywords: Trade models; Macroeconomics (search for similar items in EconPapers)
JEL-codes: F1 F4 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2019-12
New Economics Papers: this item is included in nep-cna, nep-int, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations:
Published in Economic Modelling (January 2022), 94: 296-302
Downloads: (external link)
https://cowles.yale.edu/sites/default/files/files/pub/d22/d2214.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2214
Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.
Access Statistics for this paper
More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().