Tariffs, trade and productivity: A quantitative evaluation of heterogeneous firm models

Author(s)
Holger Breinlich, Alejandro Cunat
Abstract

We examine the quantitative predictions of heterogeneous firm in the context of the Canada-US Free Trade Agreement (CUSFTA) of 1989. We compute predicted increases in trade flows and measured productivity and compare them to the post-CUSFTA increases observed in the data. Most models predict increases in measured productivity that are too low by an order of magnitude relative to predicted increases in trade flows. A multi-product firm extension that allows for within-firm productivity increases has the potential to reconcile model predictions with the data.

Organisation(s)
Department of Economics
External organisation(s)
University of Essex
Journal
The Economic Journal
Volume
126
Pages
1660-1702
No. of pages
43
ISSN
0013-0133
DOI
https://doi.org/10.1111/ecoj.12218
Publication date
09-2016
Peer reviewed
Yes
Austrian Fields of Science 2012
502003 Foreign trade
Keywords
ASJC Scopus subject areas
Economics and Econometrics
Portal url
https://ucris.univie.ac.at/portal/en/publications/tariffs-trade-and-productivity-a-quantitative-evaluation-of-heterogeneous-firm-models(19d2f3be-c314-4774-a8ac-23fb8a8584b5).html