Composition of Capital and Gains from Trade in Equipment
Piyusha Mutreja ()
MPRA Paper from University Library of Munich, Germany
Composition of capital varies systematically with incomes: rich countries have higher equipment capital shares than poor countries. Also, equipment production is highly concentrated and most countries import equipment. I investigate the quantitative importance of equipment trade for capital composition and how it affects incomes through capital composition. In a multi-country trade model, I show that equipment trade accounts for one-quarter of the cross-country variation in equipment capital share. The decline in equipment trade barriers during 1985-2005 resulted in income gains for all countries. Digging into these income gains reveals that capital composition is an important transmission mechanism: changes in capital composition alone account for 45 percent of the gains, on average.
Keywords: Equipment capital; Structures capital; Capital composition; Trade; Income; Capital goods; Equipment goods (search for similar items in EconPapers)
JEL-codes: E22 F14 F43 O16 O47 (search for similar items in EconPapers)
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https://mpra.ub.uni-muenchen.de/74908/1/Mutreja_ITCC.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/76509/1/Mutreja_ITCC.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/76727/1/MPRA_paper_76727.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/76837/1/MPRA_paper_76837.pdf revised version (application/pdf)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:74908
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