Working Paper: NBER ID: w15604
Authors: Natalia Ramondo; Andrs Rodriguez-Clare
Abstract: This paper quantifies the gains from openness arising from trade and multinational production (MP). We present a model that captures key dimensions of the interaction between these two flows: Trade and MP are competing ways to serve a foreign market; MP relies on imports of intermediate goods from the home country; and foreign affiliates of multinationals can export part of their output. The calibrated model implies that the gains from trade can be twice as high as the gains calculated in trade-only models, while the gains from MP are slightly lower than the gains computed in MP-only models.
Keywords: Trade; Multinational Production; Gains from Openness
JEL Codes: F1; F10; F23; F43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trade (F19) | Welfare (I38) |
| Multinational Production (MP) (F23) | Welfare (I38) |
| Trade + Multinational Production (MP) (F29) | Welfare (I38) |
| Trade (F19) | Multinational Production (MP) (F23) |
| Increased Trade Costs (F19) | Welfare Losses (D69) |
| Trade and MP interaction (F10) | Gains from Openness (F43) |