Members' Digest

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2018

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May 2018

Chairing a Bankosaurus: Has the Meteor Landed, or can Banks Evolve and Survive?

Howard DAVIES
Keywords: Howard DAVIES (Royal Bank of Scotland)
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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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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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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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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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