The distributional effects of trade: theory and evidence from the United States
What is your research about?
This project studies the distributional effects of international trade policies and shocks via their impact on consumer prices, which may be different across consumer groups who have different consumption baskets.
We have shown theoretically that, under certain assumptions, the fraction of imported goods in one's consumption basket is a sufficient statistic for the effect of a small and uniform trade liberalization on the cost of living. A group of consumers that spends relatively more on imports will benefit more from the trade liberalization, compared to other groups. The fraction of imports from a specific country, such as China, is similarly a sufficient statistic when considering a liberalization with that country only.
How did the Stone Centre grant help your research?
The Stone Centre grant allowed us to buy a new dataset which was necessary to review the datasets we built to measure import shares in spending. In the revision we've used the Nielsen-Census matched data to refine our findings and look at the other dimensions of heterogeneity.
What did you produce as part of your research?
We've produced a write-up of our research in the style of a CORE Econ textbook. You can use it to complement Unit 16 of CORE Econ's free textbook The Economy 1.0, which introduces students to the basics of international economics.
We've also produced a brief video summary of our research, in the style of CORE Econ's Economist in Action videos.
Our research is also available as a working paper on the Centre for Economic Performance website and as a research summary on the Stone Centre website.
About this grant
Title of the project: The distributional effects of trade: theory and evidence from the United States
Value of the grant: £20,000
Duration: November 2022 – December 2023
