Trade and Growth with Heterogenous Firms

Richard Baldwin and Frédéric Robert-Nicoud

No 12326, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper explores the impact of trade on growth when firms are heterogeneous. We find that greater openness produces anti-and pro-growth effects. The Melitz-model selection effects raises the expected cost of introducing a new variety and this tends to slow the rate of new-variety introduction and hence growth. The pro-growth effect stems from the impact that freer trade has on the marginal cost of innovating. The balance of the two effects is ambiguous with the sign depending upon the exact nature of the innovation technology and its connection to international trade in goods and ideas. We consider five special cases (these include the Grossman-Helpman, the Coe-Helpman and Rivera-Batiz-Romer models) two of which suggest that trade harms growth; the others predicting the opposite.

JEL-codes: H32 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-int and nep-pbe
Date: 2006-06
Note: ITI
View list of references View citations in EconPapers

Downloads: (external link)
http://www.nber.org/papers/w12326.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

Related works:
Working Paper: Trade and Growth with Heterogeneous Firms (2005)
Working Paper: Trade and Growth with Heterogenous Firms (2006)
Working Paper: Trade and Growth with Heterogeneous Firms (2006)
Journal Article: Trade and growth with heterogeneous firms (2008)
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: http://EconPapers.repec.org/RePEc:nbr:nberwo:12326

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w12326
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc
Address: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Contact information at EDIRC.
Series data maintained by ().