nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2017‒11‒12
24 papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement By Lorenzo Caliendo; Luca David Opromolla; Fernando Parro; Alessandro Sforza
  2. Informality and Productivity: The Role of Unemployment Insurance Schemes By Cirelli, Fernando; Espino, Emilio; Sanchez, Juan M.
  3. Heterogeneity in Staggered Wage Bargaining and Unemployment Volatility Puzzle By Engin Kara; Yongmin Park
  4. Financial Frictions, Trade, and Misallocation By Kohn, David; Leibovici, Fernando; Szkup, Michal
  5. Fiscal policy transmission in a non-Ricardian model of a monetary union By Christoph Bierbrauer
  6. Capital Specificity, the Distribution of Marginal Products and Aggregate Productivity By Lanteri, Andrea; Medina, Pamela
  7. Complex Asset Markets By Eisfeldt, Andrea L.; Lustig, Hanno; Zhang, Lei
  8. Financial and real shocks and the effectiveness of monetary and macroprudential policies in Latin American countries By Javier Garcia-Cicco; Markus Kirchner; Julio Carrillo; Diego Rodríguez; Fernando Perez; Rocío Gondo; Carlos Montoro; Roberto Chang
  9. Heterogeneity and the Public Sector Wage Policy By Gomes, Pedro Maia
  10. The Tradeoffs in Leaning Against the Wind By Gourio, Francois; Kashyap, Anil K.; Sim, Jae W.
  11. Selecting Primal Innovations in DSGE models By Ferroni, Filippo; Grassi, Stefano; Leon-Ledesma, Miguel A.
  12. Family Tax Policy with Heterogeneous Altruistic Households By Lucia Granelli
  13. Accrual Accounting and Resource Allocation: A General Equilibrium Analysis By Choi, Jung Ho
  14. Heterogeneous Consumers, Segmented Asset Markets, and the Real Effects of Monetary Policy By Zeno Enders
  15. Facilitating the Search for Partners on Matching Platforms: Restricting Agents' Actions By Kanoria, Yash; Saban, Daniela
  16. Fiscal Consolidation in a Low Inflation Environment: Pay Cuts versus Lost Jobs By Guilherme Bandeira; Evi Pappa; Rana Sajedi; Eugenia Vella
  17. Cross-country spillovers from macroprudential regulation: Reciprocity and leakage By Margarita Rubio
  18. Retirement in the Shadow (Banking) By Guillermo Ordoñez; Facundo Piguillem
  19. (Un)expected monetary policy shocks and term premia By Kliem, Martin; Meyer-Gohde, Alexander
  20. Earnings Inequality and the Minimum Wage: Evidence from Brazil By Niklas Engbom; Christian Moser
  21. Flow specific capital controls for emerging markets By Chris Garbers; Guangling Liu
  22. Unconventional Monetary Policy under Appreciation Pressure - The Role of Financial Frictions By Nicole Aregger; Jessica Leutert
  23. The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration By Gene Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  24. Trade Integration in Colombia: A Dynamic General Equilibrium Study with New Exporter Dynamics By Alessandria, George; Avila, Oscar

  1. By: Lorenzo Caliendo; Luca David Opromolla; Fernando Parro; Alessandro Sforza
    Abstract: The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model with trade in goods and labor mobility across countries to study and quantify the economic effects of trade and labor market integration. In our model trade is costly and features households of different skills and nationalities facing costly forward-looking relocation decisions. We use the EU Labour Force Survey to construct migration ows by skill and nationality across 17 countries for the period 2002-2007. We then exploit the timing variation of the 2004 EU enlargement to estimate the elasticity of migration ows to labor mobility costs, and to identify the change in labor mobility costs associated to the actual change in policy. We apply our model and use these estimates, as well as the observed changes in tariffs, to quantify the effects from the EU enlargement. We find that new member state countries are the largest winners from the EU enlargement, and in particular unskilled labor. We find smaller welfare gains for EU-15 countries. However, in the absence of changes to trade policy, the EU-15 would have been worse off after the enlargement. We study even further the interaction effects between trade and migration policies and the role of different mechanisms in shaping our results. Our results highlight the importance of trade for the quantification of the welfare and migration effects from labor market integration.
    Date: 2017
  2. By: Cirelli, Fernando; Espino, Emilio; Sanchez, Juan M.
    Abstract: We study the design of optimal unemployment protection schemes to evaluate its impact on labor markets, welfare and productivity. We consider a life-cycle economies with formal and informal labor markets, unobservable effort to find and keep formal jobs, and unobservable heterogeneities across worker to find better formal jobs. We analyze the first best allocation to compare with the allocations stemming from the implementation of two alternative schemes: (i) a simple unemployment insurance system with a defined profile of unemployment benefits; (ii) an unemployment insurance saving account scheme parameterized by a replacement rate, an initial contribution to the saving account, a minimum level of savings at which the payment is suspended, and a maximum level of savings at which the contributions are suspended. Our quantitative analysis makes clear that both schemes can have a significant impact on welfare and productivity. Two additional lessons can be learned. First, no scheme is necessarily better in both economies. Second, a reform that implements an scheme that it is welfare improving does not necessarily boost productivity and viceversa.
    Keywords: Economía, Investigación socioeconómica, Trabajo y protección social, Desempleo,
    Date: 2017
  3. By: Engin Kara; Yongmin Park
    Abstract: It has been noted that the search and matching model cannot account for the observed unemployment fluctuations. Gertler and Trigari (2009) show this weakness of the model disappears when wage stickiness is introduced to the model. Pissarides (2009) disagrees with this modification, arguing that new hires’ wages are not sticky. We argue that there is heterogeneity in wage setting: while some wages are sticky, the others are not. We generalise the model to account for this heterogeneity. We find that the new model with even only a small fraction of sticky wage contracts comes closer to matching the data.
    Keywords: search and matching, heterogeneity in staggered wage bargaining, unemployment volatility puzzle
    JEL: E24 E32 J64
    Date: 2017
  4. By: Kohn, David; Leibovici, Fernando; Szkup, Michal
    Abstract: We investigate the extent to which financial frictions shape the aggregate effects of a trade liberalization through their impact on aggregate total factor productivity (TFP) and capital misallocation. We study a small open economy populated with heterogeneous entrepreneurs who differ in their productivity and are subject to financing constraints. Individuals choose whether to be workers or entrepreneurs, and entrepreneurs choose whether to export or not. We show how financial frictions distort these decisions and aggregate TFP. We calibrate the model to match key features of Chilean plant-level data and use it to quantify the TFP losses due to misallocation. We then investigate how the presence of financial constraints affects the output and TFP gains from trade liberalization. We find that lowering trade barriers has a stronger positive effect in less financially developed economies. The higher profits that result from trade liberalizations allow firms to accumulate assets and relax their credit constraint, which is particularly valuable in economies where firms are severely constrained.
    Keywords: Economía, Emprendimiento, Investigación socioeconómica, Productividad, Sector productivo, Comercio, Finanzas,
    Date: 2017
  5. By: Christoph Bierbrauer (Hochschule Darmstadt)
    Abstract: We present an analytically tractable two-country New Open Economy Macroeconomics model of a currency union featuring an overlapping generations structure of the Blanchard (1985)-Yaari (1965) type. It enables us to study the transmission and spillover effects of a wider range of fiscal shocks in comparison to the standard model. We show that, depending on the financing decision of the government, fiscal policy measures can have very different effects on key macroeconomic variables such as consumption and output. Moreover, the spillovers of national fiscal policy depend on the composition of government spending, the type of the fiscal measure and the cross-country substitutability between goods.
    Keywords: Overlapping generations; New open economy macroeconomics; Public Debt; Decentralized fiscal policy; Monetary union
    JEL: E62 F33 F41 H31 H50 H63
    Date: 2017–10–29
  6. By: Lanteri, Andrea; Medina, Pamela
    Abstract: This paper studies the role of capital specificity and investment irreversibility on the distribution of marginal products of capital and aggregate TFP. We use a methodology new to the misallocation literature, based on the study of “mobility” across quantiles of a distribution. In a panel of Peruvian firms, we show that persistent dispersion in marginal products is explained to an important extent by the persistence of low marginal products. That is, by unproductive firms that take a long time to downsize. Using a quantitative general-equilibrium model of firm dynamics with idiosyncratic shocks, calibrated to match key features of our data, we argue that the persistence of low marginal products suggests that irreversibility frictions are large. Moreover, it is inconsistent with theories of misallocation based only on financing constraints.
    Keywords: Economía, Investigación socioeconómica, Productividad,
    Date: 2017
  7. By: Eisfeldt, Andrea L. (UCLA); Lustig, Hanno (Stanford University); Zhang, Lei (University of Hong Kong)
    Abstract: We develop a dynamic equilibrium model of complex asset markets with endogenous entry and exit in which the investment technology of investors with more expertise is subject to less asset-specific risk. The joint equilibrium distribution of financial expertise and wealth then determines this asset market's risk bearing capacity. Higher expert demand lowers equilibrium required returns, reducing overall participation. In a dynamic industry equilibrium, investor participation in more complex asset markets with more asset-specific risk is lower, despite higher market-level Sharpe ratios, as long as asset complexity and expertise are complements. We analyze how asset complexity affects the stationary wealth distribution of complex asset investors. Because of selection, increased complexity reduces expertise heterogeneity and wealth concentration, even though the wealth distribution for more expert investors has fatter tails.
    Date: 2017–05
  8. By: Javier Garcia-Cicco; Markus Kirchner; Julio Carrillo; Diego Rodríguez; Fernando Perez; Rocío Gondo; Carlos Montoro; Roberto Chang
    Abstract: This work compares the impact of monetary and macroprudential policies on financial and real sectors in four Latin American countries: Chile, Colombia, Mexico and Peru, and explores the commonalities and differences in the reaction to shocks to both the financial and real sector. In order to do that, we estimate a New Keynesian small open economy model with frictions in the domestic financial intermediation sector and a commodity sector for each country. Results suggest that financial shocks are important drivers of output and investment fluctuations in the short run for most countries, but in the long run their contribution is small. Furthermore, we evaluate the ability of macroprudential policies to limit the impact on credit growth and its effect on real variables. In a scenario of tighter financial conditions, monetary policy becomes expansionary due to both lower inflation (given the exchange rate appreciation) and weaker output growth, and macroprudential policies further contribute to restoring credit and output growth. However, in the case of a negative commodity price shock, macroprudential policies are less effective but useful as a complement for the tightening of monetary policy. Higher inflation (due to the exchange rate depreciation) and higher policy rates lead to a contraction in output growth, but macroprudential policies could alleviate this by improving credit conditions.
    Keywords: central banking, monetary policy, macroprudential policy, financial frictions
    JEL: E52 F41 F47
    Date: 2017–10
  9. By: Gomes, Pedro Maia (Birkbeck, University of London)
    Abstract: A model with search and matching frictions and heterogeneous workers was established to evaluate a reform of the public sector wage policy in steady-state. The model was calibrated to the UK economy based on Labour Force Survey data. A review of the pay received by all public sector workers to align the distribution of wages with the private sector reduces steady-state unemployment by 1.4 percentage points.
    Keywords: public sector employment, public sector wages, public sector wage premium, unemployment, skilled workers, worker heterogeneity
    JEL: E24 E62 J45
    Date: 2017–10
  10. By: Gourio, Francois (Federal Reserve Bank of Chicago); Kashyap, Anil K. (University of Chicago); Sim, Jae W. (Board of Governors)
    Abstract: Credit booms sometimes lead to financial crises which are accompanied with severe and persistent economic slumps. Does this imply that monetary policy should “lean against the wind” and counteract excess credit growth, even at the cost of higher output and inflation volatility? We study this issue quantitatively in a standard small New Keynesian dynamic stochastic general equilibrium model which includes a risk of financial crisis that depends on “excess credit”. We compare monetary policy rules that respond to the output gap with rules that respond to excess credit. We find that leaning against the wind may be attractive, depending on several factors, including (1) the severity of financial crises; (2) the sensitivity of crisis probability to excess credit; (3) the volatility of excess credit; (4) the level of risk aversion.
    Keywords: Credit risk; financial crisis; monetary policy
    JEL: E52 E58 G28
    Date: 2017–08–01
  11. By: Ferroni, Filippo (Federal Reserve Bank of Chicago); Grassi, Stefano (University of Rome); Leon-Ledesma, Miguel A. (University of Kent)
    Abstract: DSGE models are typically estimated assuming the existence of certain primal shocks that drive macroeconomic fluctuations. We analyze the consequences of estimating shocks that are "non-existent" and propose a method to select the primal shocks driving macroeconomic uncertainty. Forcing these non-existing shocks in estimation produces a downward bias in the estimated internal persistence of the model. We show how these distortions can be reduced by using priors for standard deviations whose support includes zero. The method allows us to accurately select primal shocks and estimate model parameters with high precision. We revisit the empirical evidence on an industry standard medium-scale DSGE model and find that government and price markup shocks are innovations that do not generate statistically significant dynamics.
    Keywords: Reduced rank covariance matrix; DSGE models; stochastic dimension search
    JEL: C10 E27 E32
    Date: 2017–08–01
  12. By: Lucia Granelli (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper presents a general equilibrium model, with overlapping generations and heterogeneous altruistic households. Taking into account the heterogeneity of households allows one to develop an alternative framework to explain why empirical estimations find pro-nativist fiscal subsidies to have only a small aggregate effect on the fertility rate of an economy, while fiscal subsidies have a larger effect on the fertility of the households who are their beneficiaries, as generally highlighted by theoretical models on fertility decisions. On the basis of this framework, different policy experiments are performed. First, an increase in pro-nativist fiscal subsidies is targeted only to the households having the lowest initial level of labour income; second, an increase in pro-nativist fiscal subsidies is generalized to all the groups of households; and, third, a change in the tax rate on the inter-generational transfers left by households with the highest labour income is assessed as a policy tool alternative to the use of pro-nativist fiscal subsidies.
    Date: 2017–11–03
  13. By: Choi, Jung Ho (Stanford University)
    Abstract: I evaluate the role of accrual accounting in improving firms' production decisions and resource allocation across firms. I introduce both cash flow and accounting earnings as imperfect measures of performance into a general equilibrium model with heterogeneous firms under imperfect information. The model demonstrates firms' more informed decisions with an improved measure of performance lead to more resources being allocated to potentially high-productivity firms through the product and input markets. The estimated parameter values are consistent with accrual accounting improving managers' information about future productivity by providing a better measure of performance. The quantitative analysis suggests having accrual accounting information in addition to cash accounting information leads to a 0.7% increase in aggregate productivity and a 1.0% increase in aggregate output through resource allocation in the United States. The estimates are larger in China and India as benchmarks for developing countries: a 1.2%-2.5% increase in aggregate productivity and a 1.7%-3.8% increase in aggregate output. Overall, I demonstrate accrual accounting plays an important role in determining aggregate productivity through resource allocation.
    Date: 2017–07
  14. By: Zeno Enders
    Abstract: This paper proposes a novel mechanism by which changes in the distribution of money holdings have real effects. Specifically, I develop a flexible-price model of segmented asset markets that generates real aggregate effects of monetary policy through the dependence of optimal markups on the heterogeneity of money holdings. Because varieties of consumption bundles are purchased sequentially, newly injected money disseminates slowly throughout the economy via second-round effects. The model predicts a short-term inflation-output trade-off, a liquidity effect, countercyclical markups, and procyclical wages after monetary shocks. Among other correlations of financial variables, it also reproduces the empirical, negative relationship between changes in the money supply and markups.
    Keywords: segmented asset markets, monetary policy, countercyclical markups, liquidity effect, heterogenous money holdings
    JEL: E31 E32 E51
    Date: 2017
  15. By: Kanoria, Yash (Stanford University); Saban, Daniela (Stanford University)
    Abstract: Two-sided matching platforms, such as those for labor, accommodation, dating, and taxi hailing, can control and optimize over many aspects of the search for partners. To understand how the search for partners should be designed, we consider a dynamic two-sided search model with strategic agents who must spend a cost to discover their value for each potential partner. We find that in many settings, the platform can mitigate wasteful search effort by restricting what agents can see/do. Surprisingly, simple restrictions can improve social welfare even when screening costs are small, and agents on each side are ex-ante homogeneous. In asymmetric markets where agents on one side have a tendency to be more selective (due to smaller screening costs or greater market power), the platform should force the more selective side of the market to reach out first, by explicitly disallowing the less selective side from doing so. This allows the agents on the less selective side to exercise more choice in equilibrium. When agents are vertically differentiated, the platform can significantly improve welfare even in the limit of vanishing screening costs, by forcing one side of the market to propose and by hiding quality information. Furthermore, a Pareto improvement in welfare is possible in this limit.
    Date: 2017–07
  16. By: Guilherme Bandeira (Bank of Spain); Evi Pappa (European University Institute); Rana Sajedi (Bank of England); Eugenia Vella (Department of Economics, University of Sheffield)
    Abstract: We construct a model of a monetary union to study fiscal consolidation in the Periphery of the Euro area, through cuts in public sector wages or hiring when the nominal interest rate is constrained at its lower bound. Consolidation induces a positive wealth effect that increases demand, as well as a reallocation of workers towards the private sector, which together boost private activity. However, in a low inflation environment, demand is suppressed and the private sector is not able to absorb the additional workers. Comparing the two instruments, cuts in public hiring increase unemployment persistently in this environment, while wage cuts can reduce it. Regions with higher mobility of labor between the two sectors are able to consolidate more effectively. Price flexibility is also key at the zero lower bound: for a higher degree of price rigidity in the Periphery, consolidation becomes harder to achieve. Consolidations can be self-defeating when the public good is productive.
    Keywords: Fiscal Consolidation, Public Wage Bill, Zero Lower Bound
    JEL: E32 E62
    Date: 2017–08
  17. By: Margarita Rubio
    Abstract: In a globally interconnected banking system, there can be spillovers from domestic macroprudential policies to foreign banks and vice versa, for example, through the presence of foreign branches in the domestic economy. The lack of reciprocity of some macroprudential instruments may result in an increase in bank flows to those banks with lower regulatory levels, a phenomenon known as "leakage." This may decrease the effectiveness of macroprudential policies in the pursuit of financial stability. To explore this topic, I consider a two-country DSGE model with housing and credit constraints. Borrowers can choose whether to borrow from domestic and foreign banks. Macroprudential policies are conducted at a national level and are represented by a countercyclical rule on the loan-to-value ratio. Results show that when there are some sort of reciprocity agreements on macroprudential policies across countries, financial stability and welfare gains are larger than in a situation of non reciprocity. An optimal policy analysis shows that, in order to enhance the effectiveness of macroprudential policies, reciprocity mechanisms are desirable although the foreign macroprudential rule does not need to be as aggressive as the domestic one.
    Keywords: Macroprudential Policies, Spillovers, Banking Regulation, Foreign
    Date: 2017
  18. By: Guillermo Ordoñez (University of Pennsylvania and NBER); Facundo Piguillem (EIEF and CEPR)
    Abstract: The U.S.economy has recently experienced a large increase in life expectancy and in shadow banking activities. We argue these two phenomena are intimately related. Agents resort on financial intermediaries to buy insurance against an uncertain life span after retirement. When they expect to live longer they are more prone to rely on financial intermediaries that are riskier but offer better terms for insurance – shadow banks. We calibrate the model to replicate the level of financial intermediation in 1980, introduce the observed change in life expectancy and show that the demographic transition is critical to account for the boom both of shadow banking and credit that preceded the recent U.S. financial crisis. We construct a counterfactual without shadow banks and show that they may have contributed 0.5 GDP, which is larger than the cost of the crisis of around 0.2 GDP.
    Date: 2017
  19. By: Kliem, Martin; Meyer-Gohde, Alexander
    Abstract: We analyze an estimated stochastic general equilibrium model that replicates key macroeconomic and financial stylized facts during the Great Moderation of 1983-2007. Our model predicts a sizeable and volatile nominal term premium - comparable to recent reduced-form empirical estimates - with real risk two times more important than inflation risk. The model enables us to address salient questions about the effects of monetary policy on the term structure of interest rates. We find that monetary policy can have sizeable and differing effects on nominal and real risk premia, rationalizing many opposing findings in the empirical literature.
    Keywords: DSGE model,Bayesian estimation,Term structure,Monetary policy
    JEL: E13 E31 E43 E44 E52
    Date: 2017
  20. By: Niklas Engbom; Christian Moser
    Abstract: We quantify the effect of a minimum wage on compression throughout the earnings distribution. Using the case of Brazil, which experienced a large decrease in earnings inequality while its real minimum wage increased from 1996-2012, we document that the inequality decrease was bottom-driven yet widespread, with compression up to the 75th earnings percentile. We develop an equilibrium search model with heterogeneous firms and workers and find that effects of the minimum wage are consistent with the above facts, explaining 70 percent of the observed inequality decrease, with half of the decrease due to spillovers further up the earnings distribution.
    Keywords: worker and firm heterogeneity, minimum wage, matched employer-employee data, equilibrium search model
    JEL: E24 E61 J31
    Date: 2017
  21. By: Chris Garbers; Guangling Liu
    Abstract: This paper investigates the impact of capital controls on business cycle fluctuations and welfare. To perform this analysis, we deploy an asymmetric two country model that is subject to negative foreign interest rate shocks. The results show that both an inflow and outflow capital control are able to attenuate capital flow dynamics, but each control bears different implications for macroeconomic outcomes. Whilst the outflow capital control is associated with shock attenuation benefits, the inflow capital control is shown to amplify the impact of shocks. Easier capital control regimes enhance the attenuation and amplification properties associated with each capital control, whilst strict regimes do the opposite. Lastly, the analysis shows that the welfare effects of capital controls are agent dependent, and that society prefers the outflow capital control to the inflow capital control. Taken together, these results are indicative of the comparative desirability of capital controls imposed on the financial sector (outflows) as compared to the real sector (inflows).
    Keywords: Capital controls, Welfare, Wealth, DSGE, real business cycle, Financial intermediation
    JEL: E21 E32 E43 E44 E51 E52
    Date: 2017–10
  22. By: Nicole Aregger; Jessica Leutert
    Abstract: We build a two-country model with imperfect financial intermediation. Banks face limits to arbitrage which lead to positive excess returns in the investment markets and a risk premium in the international credit market. Gross capital flows affect the exchange rate since banks are balance sheet constrained and can only absorb additional fl ows on the international credit market if the exchange rate adjusts. Similarly, unconventional monetary policies such as foreign exchange interventions and credit easing infl uence asset prices in financial markets where banks are credit constrained. Within this framework, we study three external sources of appreciation pressure: Financial frictions in the foreign investment market, financial frictions in the international credit market and capital infl ow shocks. In the two latter cases, foreign exchange interventions can reverse the resulting exchange rate movements and misallocations of capital. Furthermore, under certain conditions, foreign exchange interventions and credit easing are substitutes since asset purchases in one market reduce the excess returns in both.
    Date: 2017–11
  23. By: Gene Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
    Abstract: We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation à la Ben Porath (1967) and capital-skill complementarity à la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share.
    Keywords: neoclassical growth, balanced growth, technological progress, capital-skill complementarity, labor share, capital share
    JEL: O40
    Date: 2017
  24. By: Alessandria, George; Avila, Oscar
    Abstract: We study Colombia’s trade integration over a 30 year period through the lens of GE model in which non-exporters have access to a risky exporting technology and exporters must invest in accumulating a better exporting technology. Our model is calibrated to match the producer and exporter lifecycles and yields a novel estimate of the various costs of exporting. We find the upfront costs of starting to export are much lower than in previous analyses but that this technology is quite risky in that most firms that incur the cost do not end up with an export opportunity. We also find that for existing exporters, expanding exports requires sustained export-specific investments. We then examine the transition following Colombia’s 89-91 trade reform. We show that the relationship between the firm-level export intensity and aggregate export intensity disciplines the changes in technology and policy accounting for this integration. We find that a common decline in tariffs can account for about 75 percent of the growth in exports as a share of manufacturing sales. We attribute the remaining 25 percent to an increase in the success of investments in export market access. About 10 percent of the increase in trade is accounted for by the endogenous accumulation of an improved exporting technology by existing exporters. These changes in policy and exporting technology boost welfare by about 7.1 percent. The transition following the reforms is characterized by an overshooting of output and consumption, with consumption peaking 15 years after the policy. Further tariff reductions are expected to increase welfare another 6.2 percent.
    Keywords: Comercio internacional, Economía, Investigación socioeconómica, Productividad, Sector privado, Sector productivo,
    Date: 2017

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