Recent quantitative trade models treat import tariffs as pure cost shifters so that their effects are similar to iceberg trade costs. We introduce revenue-generating import tariffs, which act as demand shifters, into the framework of Arkolakis, Costinot and Rodriguez-Clare (2012), and generalize...

Recent trade theory in the Krugman (1980) tradition predicts that countries with larger market size enjoy higher levels of total factor productivity (TFP) – and equivalently of real per capita income or welfare – as a smaller fraction of spending on inputs is affected by trade costs....

Growth theory predicts that natural disasters should, on impact, lower GDP per capita. However, the empirical literature does not offer conclusive evidence. Most existing studies use disaster data drawn from damage records of insurance companies. We argue that this may lead to estimation bias as...

Does trade openness cause higher GDP per capita? Since the seminal instrumental variables (IV) estimates of Frankel and Romer [F&R](1999) important doubts have surfaced. Is the correlation spurious and driven by omitted geographical and institutional variables? In this paper, we generalize F&R's...

Increasing-returns-to-scale imperfect competition trade models predict a more than proportionate relationship between the larger country's share in world endowments and its share in producing firms: the so called home market effect (HME). While this result plays a key role in empirical testing,...

We develop a simple methodology to estimate monthly aggregate supply and demand conditions from bilateral international trade data for about 180 countries and 40 years. We apply our method to measure the short-run effects of natural disasters. In line with theoretical considerations, we find...

This paper characterizes analytically the optimal tariff of a large one-sector economy with monopolistic competition and firm heterogeneity in general equilibrium, thereby extending the small-country results of Demidova and Rodriguez-Clare (JIE, 2009) and the homogeneous firms framework of Gros...