A Test of Trade Theories when Expenditure is Home Biased
Marius Brülhart and
Federico Trionfetti
Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie
Abstract:
We develop and apply a criterion to distinguish two paradigms of international trade theory: constant-returns perfectly competitive models, and increasing-returns monopolistically competitive models. Our analysis makes use of the pervasive presence of home-biased expenditure. It predicts that countries' relative output and their relative home biases are positively correlated in increasing-returns sectors, while no such relationship exists in constant-returns sectors. We estimate country-level sectoral home biases through a gravity equation for international and intranational trade, and we use those estimates to implement our test on input-output data for six European Union economies.
Keywords: international specialisation; new trade theory; home-market effects; border effects (search for similar items in EconPapers)
JEL-codes: F1 R3 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2001-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)
Downloads: (external link)
http://www.hec.unil.ch/deep/textes/01.11.pdf (application/pdf)
Related works:
Journal Article: A test of trade theories when expenditure is home biased (2009) 
Working Paper: A test of trade theories when expenditure is home biased (2009) 
Working Paper: A Test of Trade Theories when Expenditure is Home Biased (2005) 
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:lau:crdeep:01.11
Access Statistics for this paper
More papers in Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie Université de Lausanne, Faculté des HEC, Département d’économie, Internef, CH-1015 Lausanne. Contact information at EDIRC.
Bibliographic data for series maintained by Christina Seld ().