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Goods-Market Frictions and International Trade

Andrew McCallum and Pawel Krolikowski ()
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Andrew McCallum: Federal Reserve Board

No 515, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We present a tractable framework that embeds goods-market frictions in a general equilibrium dynamic model with heterogeneous exporters and identical importers. These frictions arise because it takes time and expense for exporters and importers to meet. We show that search frictions lead to an endogenous fraction of unmatched exporters, alter the gains from trade, endogenize entry costs, and imply that the competitive equilibrium does not generally result in the socially optimal number of searching firms. Finally, ignoring search frictions results in biased estimates of the effect of tariffs on trade flows.

New Economics Papers: this item is included in nep-dge and nep-int
Date: 2017
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https://economicdynamics.org/meetpapers/2017/paper_515.pdf (application/pdf)

Related works:
Working Paper: Goods-Market Frictions and International Trade (2019) Downloads
Working Paper: Goods-Market Frictions and International Trade (2018) Downloads
Working Paper: Goods-Market Frictions and International Trade (2018) Downloads
Working Paper: Goods-Market Frictions and International Trade (2017) Downloads
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