Gains from Trade with Flexible Extensive Margin Adjustment

Chang-Tai Hsieh, Nicholas Li, Ralph Ossa and Mu-Jeung Yang

No 22069, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We propose a new sufficient statistic to measure the gains from trade in models where the extensive margin trade elasticity is not necessarily constant. This statistic is a function of one data moment, the market share of continuing domestic products, and one parameter, the elasticity of substitution between products. It measures the gains from trade in a Ricardian model with any productivity distribution or a Melitz model with any productivity distribution and any pattern of selection into production and exporting. We apply our statistic to measure Canada's gains from the Canada-US Free Trade Agreement and find that they are smaller than suggested by statistics that assume a constant extensive margin response of trade.

JEL-codes: F10 F12 F14 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-int
Note: EFG ITI PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Chang-Tai Hsieh & Nicholas Li & Ralph Ossa & Mu-Jeung Yang, 2023. "Gains from trade liberalization with flexible extensive margin adjustment," Journal of International Economics, .

Downloads: (external link)
http://www.nber.org/papers/w22069.pdf (application/pdf)

Related works:
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:nbr:nberwo:22069

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w22069

Access Statistics for this paper

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