A Test of Trade Theories when Expenditure is Home Biased

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serval:BIB_18671
Type
Report: a report published by a school or other institution, usually numbered within a series.
Publication sub-type
Working paper: Working papers contain results presented by the author. Working papers aim to stimulate discussions between scientists with interested parties, they can also be the basis to publish articles in specialized journals
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Publications
Institution
Title
A Test of Trade Theories when Expenditure is Home Biased
Author(s)
Brülhart M., Trionfetti F.
Institution details
Université de Lausanne - HEC - DEEP
Issued date
11/2001
Number
01.11
Genre
Cahiers de recherches économiques
Language
english
Number of pages
39
Abstract
We develop and apply a criterion to distinguish two paradigms of international trade theory: constant-returns perfectly competitive models, and increasing-returns monopolistically competitive models. Our analysis makes use of the pervasive presence of home-biased expenditure. It predicts that countries' relative output and their relative home biases are positively correlated in increasing-returns sectors, while no such relationship exists in constant-returns sectors. We estimate country-level sectoral home biases through a gravity equation for international and intranational trade, and we use those estimates to implement our test on input-output data for six European Union economies.
Keywords
international specialisation, new trade theory, home-market effects, border effects
Create date
19/11/2007 9:40
Last modification date
20/08/2019 12:48
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