Senior Fellows/Fellows

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Senior Fellows/Fellows

Income Inequality, Productivity, and International Trade

Wen-Tai HSU, Lin LU, Pierre M. PICARD
This paper discusses the effect of income inequality on selection and aggregate productivity in a general equilibrium model with non-homothetic preferences. It shows the existence of a negative relationship between the number and quantity of products consumed by an income group and the earnings of o...
Keywords: Income inequality, productivity, International trade
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Competition, Markups, and Gains from Trade: A Quantitative Analysis of China Between 1995 and 2004

Wen-Tai HSU, Yi LU, Guiying Laura WU
This paper provides a quantitative analysis of gains from trade in a model with head-to-head competition using Chinese firm-level data from Economic Censuses in 1995 and 2004. We find a significant reduction in trade cost during this period, and total gains from such improved openness during this pe...
Keywords: gains from trade, markups, pro-competitive effects, ACR formula, head-to-head competition, Chinese economy
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Senior Fellows/Fellows

Innovation, Firm Size Distribution, and Gains from Trade

Wen-Tai HSU, Yi-Fan CHEN, Shin-Kun PENG
We study a trade model with monopolistic competition a la Melitz (2003) that is standard except that firm heterogeneity is endogenously determined by firms innovating to enhance their productivities. We show that the equilibrium productivity and firm-size distributions exhibit power-law tails under ...
Keywords: innovation, power law, regular variation, welfare gains from trade, firm heterogeneity
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Senior Fellows/Fellows

Deviations in real exchange rate levels in the OECD countries and their structural determinants

Martin BERKA, Daan STEENKAMP
We establish the validity of an augmented Balassa-Samuelson theory in a panel of real exchange rate levels between 18 OECD countries accounting for nearly two-thirds of the world GDP between 1970 and 2012 using a unique dataset of levels of total factor productivity (TFP) by sector. Real exchange ra...
Keywords: Real exchange rate, OECD countries, Structural determinants
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Senior Fellows/Fellows

Potential for Inward Foreign Direct Investment in Japan

Takeo HOSHI, Kozo KIYOTA
Promotion of inward foreign direct investment (FDI) into Japan has been an important policy in the Abenomics growth strategy.  This paper examines if we observe positive impacts of the policy in the data.  We first estimate a gravity model of bilateral FDIs using data for 35 OECD countries as dest...
Keywords: Inward foreign direct investment, Gravity model, Abenomics
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