APL (Ajiken Power Lunch)

Thursday, 17th of July, 12:00 to 1:15 p.m.

IDE-JETRO C23 Meeting Room 　

This paper examines the aggregate gains from trade liberalization by incorporating a novel pattern in the growth of new exporters. Using firm-level data from India, I find that younger new exporters are more likely to succeed in foreign markets compared to older new exporters. These younger firms tend to expand their foreign sales more rapidly and have a higher survival rate. To account for these empirical findings, I develop a heterogeneous firm international trade model that incorporates investment in export advantages. The calibrated model demonstrates that the dynamic gains from a permanent tariff cut accumulate gradually, while the dynamic losses from a permanent tariff increase occur immediately. The model also shows that the trade expansion following trade liberalization is considerably slower when accounting for the age heterogeneity of new exporters, compared to a counterfactual model without this feature.

Mr Kazuma Inagaki (Rochester University)

Yuta Watabe