Kiel Working Papers, Kiel Institute for World Economics
No 1801:
Learning How to Export
Paul S. Segerstrom and Ignat Stepanok
Abstract: In this paper, we present a standard quality ladders
endogenous growth model with one significant new assumption, that it takes
time for firms to learn how to export. We show that this model without
Melitz-type assumptions can account for all the evidence that the Melitz
(2003) model was designed to explain plus much evidence that the Melitz
model can not account for. In particular, consistent with the empirical
evidence we find that trade liberalization leads to a higher exit rate of
firms, that exporters charge higher prices for their products as well as
higher markups, and that many large firms do not export. We also find that
trade iberalization promotes economic growth and that it has the opposite
effect of retarding economic growth in a closely comparable growth model
with Melitz-type assumptions
Keywords: Trade liberalization, heterogeneous firms, quality ladders, endogenous growth; (follow links to similar papers)
JEL-Codes: F12,; F13,; F43,; O31,; O41; (follow links to similar papers)
52 pages, October 2012
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