Goods-Market Frictions and International Trade

Andrew McCallum and Pawel Krolikowski
Additional contact information
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.

Date: 2017
New Economics Papers: this item is included in nep-dge and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2017/paper_515.pdf (application/pdf)

Related works:
Journal Article: Goods-market frictions and international trade (2021)
Working Paper: Goods-Market Frictions and International Trade (2020)
Working Paper: Goods-Market Frictions and International Trade (2019)
Working Paper: Goods-Market Frictions and International Trade (2017)
Working Paper: Goods-Market Frictions and International Trade (2016)
Working Paper: Goods-Market Frictions and International Trade (2016)
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:sed017:515

Access Statistics for this paper

More papers in 2017 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 ().