Andres Rodriguez-Clare | Clausen Center

Andres Rodriguez-Clare

Professor

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:

Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale

Date: July 2016

Coauthors: Konstantin Kucheryavyy and Gary Lyn

Citation: Working Paper

Although economists have long been interested in the implications of Marshallian externalities (i.e., industry-level external economies of scale) for trading economies, little attention has been devoted to this topic in the recent trade literature because of the large number of equilibria that typically occur in such settings. This paper presents a multi-industry trade model with industry-level economies of scale that nests a Ricardian model with Marshallian externalities as well as multi-industry versions of Krugman (1980) and Melitz (2003). The behavior of the model depends on two industry-level elasticities: the trade elasticity and the scale elasticity.  We show that there is a unique equilibrium if the product of the trade and scale elasticities is weakly lower than one in all industries. The welfare analysis reveals that if this condition is satisfied then all countries gain from trade, even when the scale elasticity varies across industries. The presence of scale economies tends to lower the gains from trade except if the country specializes in industries with relatively high scale elasticities. On the other hand, scale economies amplify the gains from trade liberalization except if it leads to reallocation towards industries with relatively low scale elasticities.

 

Micro to Macro: Optimal Trade Policy with Firm Heterogeneity

Date: May 2016

Coauthors: Arnaud Costinot, Ivan Werning

Citation: Working Paper

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.

Clausen-Supported Research