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 Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().