Seminar in International Economics: Empirical Productivity Distributions and International Trade (Online event) | 02.12.2021

The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic

Empirical Productivity Distributions and International Trade

Katharina Erhardt
Heinrich-Heine-University Düsseldorf (Germany)

Thursday, 2nd of December 2021, 3:00 p.m. (CET)

Registration link:
The dial-in link will be sent immediately after registration.

The presentation is based on a paper co-authored with Peter H. Egger and Sergey Nigai.

We develop a novel theory-consistent methodology that allows us to recover nonparametric firm-level productivity distributions for 15 countries and 18 sectors using data on aggregated firm-level sales.

We use these distributions against the backdrop of a multi-sector version of a standard Melitz (2003) trade model to quantify the role of technology in shaping international trade flows. We find that, on average, absolute advantage measured as productivity differences across countries within sectors explains 14% of the total variation in bilateral trade shares. In contrast, on average, comparative advantage measured as productivity differences across sectors within countries explains 43% of the variation in trade flows in the workhorse model. We also demonstrate that empirical productivity distributions entail quantitatively important micro-to-macro implications for marginal responses of trade flows to changes in trade costs, for gravity-type estimation of trade models, and for comparative statics isomorphism between the customarily parameterized models of international trade. We confirm the theoretical predictions derived under empirical productivity distributions in the data.

The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW, the Centre of Competence in International Economics. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.