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This programme addresses recent debates at the frontier of the field: the distributive effects of trade, the performance of firms in the global economy, advances in methods to analyze trade flows (structural gravity), and the revival of trade policies.

Structure

  • Trade liberalization and firm performance, Maria Bas
  • Trade and Income Distribution, Ariell Reshef
  • Trade (and tax) policy, Mathieu Parenti
  • Quantitative Policy Analysis with the Structural Gravity Model of Trade, Yoto Yotov (laptop needed)

Workshop: present your paper

Participants will have the opportunity to submit a paper to be presented within this programme. The submitted paper can be either a work of the participant or an article of other authors that the participant would like to present in class. Selected papers will be presented (in 30 minutes) in front of participants and faculty in one or two slots reserved for such presentations.

The opportunity to assist to the Paris Trade Seminar

Seminar joint with PSE, Paris 1 Pantheon-Sorbonne and Sciences-Po
Speaker: Tibor Besedes, Georgia Institute of Technology, https://besedes.econ.gatech.edu/
Seminar’s website: https://www.parisschoolofeconomics.eu/en/research/seminars/trade/


Advanced methods for firm level trade data - Maria Bas

Objectives
This course presents the recent micro-econometric studies on the effect of globalization on firm performance using firm level data. The first part of the course concentrates on the empirical trade literature that investigates the role of trade liberalization through reductions of both output and input tariffs, on firm productivity gains, product innovation and wages. The second part presents the recent works that have introduced heterogeneous product quality, both on the demand and supply side, to understand why firms that export are not only the most productive but also sell products at higher prices (unit values) on the export market.

Structure

  • Trade integration and firm performance
  • Trade and product quality in heterogeneous firms’ models

References
- Amiti, M. and Konings, J., 2007, Trade Liberalization, Intermediate Inputs, and Productivity. American Economic Review, December vol. 97(05), pp.1611-1638.
- Khandelwal, A., Schott, P., Wei, S., 2013. Trade liberalization and embedded institutional reform: evidence from Chinese exporters. American Economic Review,. 103 (6), 2169–2195.
- Goldberg, P., Khandelwal, A, Pavcnik, N. and P. Topalova, 2010, Imported Intermediate Inputs and Domestic Product Growth: Evidence from India, Quarterly Journal of Economics 125(4), pp. 1727-1767.
- Verhoogen, E., 2008. Trade, quality upgrading and wage inequality in the Mexican manufacturing sector, Quarterly Journal of Economics. 123 (2), 489–530.



Trade policy - Mathieu Parenti

Objectives
New proposed trade agreements like the EU‐Canada Comprehensive Economic Trade Agreement (CETA) or the Transatlantic Transatlantic Trade and Investment Partnership (TTIP) go beyond traditional liberalization efforts. Their main goals are to dismantle non‐tariff barriers and to facilitate cross‐border investments. This course starts with a review of the theoretical rationales for trade agreements and then discusses recent developments in the political economy of trade policy. We will then see how quantitative trade models can be used to evaluate the impact of an economic dis‐integration shock such as Brexit. The last part of the course investigates how tax and trade policies interact when multinational firms are engaged in profit shifting activities.

Structure

  • Theories of trade agreements under perfect and imperfect competition
  • Firm‐level lobbying: the demand for protection and market access
  • Trade policy quantified: structural and reduced‐form approaches with an application to Brexit

References
_- Costinot, A. and Rodriguez‐Clare. (2014) Trade theory with numbers: Quantifying the consequences of globalization, Handbook of International Economics, edited by ‐ Gopinath, , Helpman and Rogoff
_- Grossman, G. The purpose of trade agreements. (2016) Handbook of Commercial Policy, edited by Bagwell and Staiger.
_- Laffite, S., Parenti, M., Souillard, B., Toubal, F. (2019) Quantifying the Effects of International Tax Reforms ECARES DP
_- Rodrik, D. (2018). What Do Trade Agreements Really Do? Journal of Economic Perspectives


Trade and Income Distribution - Ariell Reshef

Objectives
The goal is to study the income distribution consequences of globalization: trade in final goods, trade in intermediate inputs, trade in capital, offshoring, foreign direct investment, multinational firm activity. We will consider several channels through which globalization, and in particular changes in market access, affects domestic labor markets, for example, through changes in relative demand for different types of labor inputs, or through changes in incentives to invest and technological responses. These manifest themselves in the distribution of income via reallocation of resources across productive units, changes in the internal organization of productive units, fair wages, sorting, and more. Given the inherent complementarities between investment in technology and market access, it is impossible to discuss globalization without any mention of technological change, so we will also touch upon this topic as well.

Structure

  • Why do we think trade and income distribution are linked?
  • Juxtaposing the technology narrative with trade liberalization
  • The capital input channel of trade liberalization
  • Political economy of income distribution
  • Foreign direct investment and offshoring
  • Trade‐induced technological change
  • Individual effects and sorting
  • Local labor market effects

References
- Autor, Dorn and Hanson (2013): “The China Syndrome: Local Labor Effects of Import Competition in the United States”, The American Economic Review
- Burstein, Cravino and Vogel (2013): “Importing Skill‐Biased Technology”, AEJ: Macroeconomics
- Harrison, McLaren and McMillan (2011): “Recent Perspectives on Trade and Inequality”, World Bank, Policy Research Working Paper 5754
- Sampson (2014): “Selection into Trade and Wage Inequality”, American Economic Journal: Microeconomics


Quantitative Policy Analysis with the Structural Gravity Model of Trade - Yoto Yotov

Objectives
The course will offer a comprehensive review of the structural gravity model of international trade (from Newton to Structural Dynamic Gravity) and a balanced (between theory and partial and general equilibrium) approach to quantify the effects of trade and other policies with the gravity model. Hands-on session (in Stata) will complement the lectures of the course. Main concepts/theories learned during the course include: Derivation and theoretical foundations of structural gravity; Estimations challenges and best practice recommendations for gravity estimations; General Equilibrium analysis with the gravity model; Nesting structural gravity within different production superstructures.

Material needed
Laptop with Stata will be needed for the hand-on sessions. Stata will be provided by PSE

Specific prerequisites
Some experience with microeconomics and international trade, e.g., at undergraduate level. Ideally masters level. Some econometric experience and some experience with Stata. However, this is flexible, as the hands-on sessions will/could be in teams. Overall, all prerequisites are flexible.

Course structure

  • The Gravity Model of International Trade: Theoretical Foundations
  • Estimating Structural Gravity: Challenges, Solutions, and Best Practices
  • Estimating Structural Gravity: Applications
  • Hands-on Session on Estimating Structural Gravity. Application
  • General Equilibrium Analysis with the Gravity Model. Theory and Applications
  • Hands-on Session on GE Analysis with the Structural Gravity model. Applications
  • Nested Gravity: A Dynamic Gravity Model of Trade and Growth. Trade and FDI with Dynamics

References
The course is developed around the following book and the accompanying two working papers, which are extended versions of the book’s two main chapters. The book, along with data and Stata codes can be downloaded for free at https://vi.unctad.org/tpa/web/vol2/vol2home.html
- Yotov, Y. V., R. Piermartini, J. A. Monteiro, and M. Larch. 2016. “An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model”, Co-published by UNCTAD and WTO.
- Piermartini, R. and Y. V. Yotov, 2016. “Estimating Trade Policy Effects with Structural Gravity”.
- Larch, M. and Y. V. Yotov, 2016. “General Equilibrium Trade Policy Analysis with Structural Gravity”.


Contents - International Trade