We study the reasons for the large, coincident increases in unbalanced international trade and overall trade from 1970 to 2019. We show that these two salient features—a rise in net and gross international trade—are largely a consequence of a reduction in intratemporal trade barriers rather than a substantial reduction in the frictions on intertemporal trade or greater asymmetries in business cycles. Beyond explaining changes in the distribution of gross and net trade, the decline in intratemporal trade frictions is consistent with a fall in the dispersion across countries in other key macro time series, including the real exchange rate, terms of trade, export-import ratio, relative spending, and relative GDP.
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- Acknowledgements & Disclosure
- This project was supported by the National Science Foundation, Award# 2214852. We thank Masao Fukui, Ricardo Reyes-Heroles, Almuth Scholl, and Jing Zhang for their discussions. We also thank Manuel Amador, Marcos Mac Mullen, Fabrizio Perri, Kim Ruhl, and Joe Steinberg for useful comments as well as audiences at Board of Governors, Dallas Fed, Rochester, Wisconsin, 2023 ESSIM, 2021 Fall NBER IFM meeting, 2023 IMF/Norges Bank "Future of Macroeconomic Policy" conference and 2024 SED. All authors have contributed equally. A prior version of this paper was circulated as "Rising Current Account Dispersion: Financial or Trade Integration?" The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33101
- Pages
- 68
- Published in
- United States of America
Table of Contents
- NBER WORKING PAPER SERIES 1
- UNBALANCED TRADE IS GROWING DISPERSION FROM FINANCIAL OR TRADE REFORMS 1
- George A. Alessandria Yan Bai Soo Kyung Woo 1
- Working Paper 33101 httpwww.nber.orgpapersw33101 1
- NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge MA 02138 November 2024 1
- Unbalanced Trade Is Growing Dispersion from Financial or Trade Reforms George A. Alessandria Yan Bai and Soo Kyung Woo NBER Working Paper No. 33101 November 2024 JEL No. E3 F4 2
- George A. Alessandria Department of Economics University of Rochester Harkness 204 Rochester NY 14627 and NBER george.alessandriarochester.edu 2
- Yan Bai Department of Economics University of Rochester 216 Harkness Hall Rochester NY 14627 and NBER yanbai06gmail.com 2
- Soo Kyung Woo 2
- Department of Economics Sejong University 209 Neungdong-ro Gwangjin-gu Seoul 05006 South Korea sookyung.woosejong.ac.kr 2
- 1 Introduction 3
- 2 Related Literature 7
- 3 Empirics 9
- 3.1 Organizing Structure 9
- 3.2 Data 10
- 3.3 Reduced Form Analysis 13
- 4 Model 14
- 5 Quantitative Analysis 17
- 5.1 Parameterization 18
- 5.2 Assigned and matched parameters 19
- 5.3 Model Results 21
- 5.4 Robustness 23
- 6 Summary 28
- References 29
- A Data 52
- B Empirical Robustness Capital flows and trade 53
- C Persistence of Productivity Shocks 55
- D Number of Countries 56
