Department of Economics
Andres Rodriguez-Clare, is a professor of economics at the University of California, Berkeley, Director of the Trade Research Programme at the International Growth Centre, Visiting Scholar at the San Francisco Federal Reserve, and a Research Associate of the National Bureau of Economic Research (Cambridge, Massachusetts). His areas of research focus on international trade, development economics and macroeconomics. He held the position of Chairman of the Council of Presidential Advisors in Costa Rica during 1998-2002, and has written policy work in the areas of growth, innovation and technology adoption in Latin America and the Caribbean. His most recent research has focused on the effects of trade and globalization in models with monopolistic competition, looking at gains from trade, and the effects of specialization and its welfare consequences.
Summary of recent papers:
Date: May 11, 2017
Coauthors: Ana M. Fernandes (World Bank), Peter J. Klenow (Stanford), Sergii Meleshchuk (UC Berkeley), Martha Denisse Pierola (Inter-American Development Bank)
Citation: Working Paper
The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank’s Exporter Dynamics Database featuring firm-level exports from 50 countries, we find that around 50% of variation in exports does occur on the extensive margin — a quantitative victory for the Melitz framework. The remaining 50% on the intensive margin (exports per exporting firm) contradicts a special case of Melitz with Pareto-distributed firm productivity, which has become a tractable benchmark. This benchmark model predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners will occur on the extensive margin. Combining Melitz with lognormally-distributed firm productivity and firm-destination fixed trade costs can explain the intensive margin seen in the EDD data. In the EDD, the importance of the intensive margin rises steadily when going from the smallest to largest exporting firms across source countries, as is also predicted by the Melitz model with lognormally-distributed productivity.
Date: October 2016
Coauthors: Arnaud Costinot (MIT), Ivan Werning (MIT)
Citation: Working Paper, revision requested at Econometrica
The empirical observation that “large firms tend to export, whereas small firms do not” has transformed the way economists think about the determinants of international trade. Yet, it has had surprisingly little impact about how economists think about trade policy. In this paper, we characterize optimal trade policy in a generalized version of the trade model with monopolistic competition and firm-level heterogeneity developed by Melitz (2003). At the micro-level, we find that optimal import taxes discriminate against the most profitable foreign exporters, while optimal export taxes are uniform across domestic exporters. At the macro-level, we demonstrate that the selection of heterogeneous firms into exporting tends to create aggregate nonconvexities that dampen the incentives for terms-of-trade manipulation, and in turn, the overall level of trade protection.