A Global View of Creative Destruction

Chang-Tai Hsieh, Peter J. Klenow and Ishan B. Nath

No 26461, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the wake of the U.S.-Canada Free Trade Agreement, both the U.S. and Canada experienced a sustained increase in job reallocation, including firms moving into exporting. The change involved big firms as much as small firms. To mimic these patterns,we formulate a model of innovation by both domestic and foreign firms. In the model, trade liberalization quickens the pace of creative destruction, thereby speeding the flow of technology across countries. The resulting dynamic gains from trade liberalization are an order of magnitude larger than the gains in a standard static model.

JEL-codes: F11 F14 F43 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-ino, nep-int, nep-ore and nep-tid
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Citations: View citations in EconPapers (8)

Published as Chang-Tai Hsieh & Peter J. Klenow & Ishan Nath, 2023. "A Global View of Creative Destruction," Journal of Political Economy Macroeconomics, vol 1(2), pages 243-275.

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