Gravity, Productivity and the Pattern of Production and Trade

James Anderson

No 14642, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The effects of geography and productivity on the global pattern of production are captured here in a specific factors gravity model. Simple enough for sharp results, the model is yet rich enough to contain the high dimensional productivity frictions in production and distribution of a many country world. The starting point is the international incidence of productivity frictions inferred from gravity. Sellers' and buyers' incidence both reduce real income. Sellers' incidence shocks reduce sectoral skill premia. Bigger sellers' incidence by country (sector) reduces equilibrium shares of world (national) GDP. In contrast to the generalized Ricardian gravity model of Eaton and Kortum (2002), relative factor endowments play a role and import-competing production and wage premia in exporting are featured.

JEL-codes: D24 F10 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-int
Note: ITI
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Citations: View citations in EconPapers (14)

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Working Paper: Gravity, Productivity and the Pattern of Production and Trade (2008)
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