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Innovation, firm dynamics, and international trade

Andrew Atkeson and Ariel Burstein

No 444, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We present a general equilibrium model of the response of firms' decisions to operate, innovate, and engage in international trade to a change in the marginal cost of international trade. We find that, although a change in trade costs can have a substantial impact on heterogeneous firms' exit, export, and process innovation decisions, the impact of changes in these decisions on welfare is largely offset by the response of product innovation. Our results suggest that microeconomic evidence on firms' responses to changes in international trade costs may not be informative about the implications of changes in these trade costs for aggregate welfare.

Date: 2010
New Economics Papers: this item is included in nep-cse, nep-ino, nep-int and nep-tid
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http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4423 (application/pdf)
http://www.minneapolisfed.org/research/SR/SR444.pdf

Related works:
Journal Article: Innovation, Firm Dynamics, and International Trade (2010) Downloads
Working Paper: Innovation, Firm Dynamics, and International Trade (2009)
Working Paper: Innovation, Firm Dynamics, and International Trade (2007) Downloads
Working Paper: Innovation, firm dynamics, and international trade (2007) Downloads
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