Edinburgh Research Explorer

Invited speaker : IFS seminar: Bilateral Trade Imbalances

Activity: Academic talk or presentation typesInvited talk

Invited speaker

29 Jan 2020

Abstract

Bilateral trade imbalances are determined by aggregate trade imbalances, production and expenditure patterns, and trade barriers. We calibrate a dynamic many-sector trade model to match the recent sectoral trade and production shares of 40 economies and the rest of the world. Through a variance decomposition and counterfactuals, the model allows us to assess the relative importance of these determinants for the observed variation in bilateral imbalances. Large pairwise asymmetries in residual trade “wedges” are needed for the model to match the data. These account for roughly 60% of the variation, with most of the rest due to differences in production and expenditure patterns. Aggregate trade imbalances play a minor role. A counterfactual trade policy which eliminates trade-wedge asymmetries would have sizeable effects on bilateral trade patterns and welfare. However, it would leave aggregate trade balances virtually unchanged.

Event

Bilateral Trade Imbalances

Duration29 Jan 202029 Jan 2020
Location of eventThe Institute for Fiscal Studies
CityLondon
CountryUnited Kingdom
Web address (URL)
Degree of recognitionNational event

Event: Seminar

ID: 146725465