Distribution capital and the short- and long-run import demand elasticity

Jonathan Davis and Mario Crucini ()

No 453, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: International business-cycle models assume that home and foreign goods are poor substitutes. International trade models assume they are close substitutes. This paper constructs a model where this discrepancy is due to frictions in distribution. Imports need to be combined with a local non-traded input, distribution capital, which is slow to adjust. As a result, imported and domestic goods appear as poor substitutes in the short run. In the long run this non-traded input can be reallocated, and quantities can shift following a change in relative prices. Thus the observed substitutability between home and foreign goods gets larger as time passes.

Date: 2013
New Economics Papers: this item is included in nep-dge and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2013/paper_453.pdf (application/pdf)

Related works:
Journal Article: Distribution capital and the short- and long-run import demand elasticity (2016)
Working Paper: Distribution Capital and the Short- and Long-run Import Demand Elasticity (2013)
Working Paper: Distribution capital and the short- and long-run import demand elasticity (2013)
Working Paper: Distribution Capital and the Short- and Long-Run Import Demand Elasticity (2013)
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:red:sed013:453

Access Statistics for this paper

More papers in 2013 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().