Heterogeneous Agent Trade

Michael Waugh

No 653, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: This paper studies the implications of household heterogeneity for trade. I develop a model where household heterogeneity is induced via incomplete markets and results in heterogeneous price elasticities. Conditional on exposure to trade, heterogeneous price elasticities imply that different households value price changes differently, and thus rich and poor households experience different gains from trade. I calibrate the model to match bilateral trade flows and micro-facts about household-level expenditure patterns and elasticities. I find gains from trade that are pro-poor and that the average gains from trade are substantially larger than representative agent benchmarks.

Keywords: International trade; Heterogeneous agent; Inequality (search for similar items in EconPapers)
JEL-codes: D30 E20 F10 F40 (search for similar items in EconPapers)
Date: 2023-10-18
New Economics Papers: this item is included in nep-dge and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Heterogeneous Agent Trade (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:97207

DOI: 10.21034/sr.653

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