We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Why Is Manufacturing Trade Rising Even as Manufacturing Output is Falling?
- Authors
Bergoeing, Raphael; Kehoe, Timothy J.; Strauss-Kahn, Vanessa; Kei-Mu Yi
- Abstract
This article examines how increases in manufacturing trade and decreases in manufacturing output can be explained by international trade theory. To generate implications for changes in manufacturing exports and manufacturing GDP, we subject the models to three types of shocks that capture essential features of the global economy over the past three decades: increases in manufacturing productivity, increases in nonmanufacturing productivity, and decreases in trade barriers. The production site of our model is the same as in Helpman and Krugman. The nonmanufacturing sector consists of a single good produced by constant returns to scale, while the manufacturing sector consists of differentiated varieties with each variety produced according to increasing returns. In logarithms, the change in the manufacturing share equals the change in the interval of manufacturing goods produced minus the change in manufacturing productivity. Because technologies are identical across countries, under free trade, wages are equalized; moreover, the allocation of labor into manufacturing and nonmanufacturing is indeterminate. We consider two transport-cost specifications, one in which transport costs only apply to manufactured goods, and one in which transport costs apply to both types of goods.
- Subjects
ECONOMICS; INTERNATIONAL trade; INDUSTRIAL productivity
- Publication
American Economic Review, 2004, Vol 94, Issue 2, p134
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/0002828041302299