TY - JOUR
T1 - The Harrod-Balassa-Samuelson effect and endogenous extensive margins
AU - Hamano, Masashige
N1 - Funding Information:
I would like to thank the editor, John Ries, and two anonymous referees for their valuable comments. I gratefully acknowledge Phillippe Martin for his advice and encouragement. I would like to also thank Nicolas Coeurdacier, Lionel Fontagné, Robert Kollmann, Julien Licheron for providing comments and insightful discussion. In particular, I am grateful to Pierre M. Picard and Ridwan D. Rusli for their detailed reading of the text and their helpful comments. I thank all seminar participants at the Universities Rennes 1, Paris 1 and the 4th doctoral meeting, MACROFI. The paper is based on the first chapter of my Ph.D. dissertation. All remaining errors are my own. This project has been supported by the Grant F2R-CRE-PUL-10EGQH at the University of Luxembourg .
PY - 2014/3
Y1 - 2014/3
N2 - In the last few decades, the world economy has witnessed the expansion of trade, especially in the number of exchanged varieties, the so-called "extensive margins". In a theoretical model where extensive margins in both tradable and non-tradable sectors are endogenously determined, it is shown that the Harrod-Balassa-Samuelson (HBS) effect is amplified. Following an HBS productivity shock, when countries expand their extensive margins rather than the scale of production, wages appreciate further. Therefore, the expansion in extensive margins leads to a stronger appreciation in the price of non-traded goods. Furthermore, when traded and non-traded goods are complements, the number of firms in the non-traded sector increases despite the appreciation of non-traded goods prices.
AB - In the last few decades, the world economy has witnessed the expansion of trade, especially in the number of exchanged varieties, the so-called "extensive margins". In a theoretical model where extensive margins in both tradable and non-tradable sectors are endogenously determined, it is shown that the Harrod-Balassa-Samuelson (HBS) effect is amplified. Following an HBS productivity shock, when countries expand their extensive margins rather than the scale of production, wages appreciate further. Therefore, the expansion in extensive margins leads to a stronger appreciation in the price of non-traded goods. Furthermore, when traded and non-traded goods are complements, the number of firms in the non-traded sector increases despite the appreciation of non-traded goods prices.
KW - Extensive margin
KW - Firm entry
KW - Harrod-Balassa-Samuelson
KW - Real exchange rate
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U2 - 10.1016/j.jjie.2012.06.004
DO - 10.1016/j.jjie.2012.06.004
M3 - Article
AN - SCOPUS:84895904934
SN - 0889-1583
VL - 31
SP - 98
EP - 113
JO - Journal of The Japanese and International Economies
JF - Journal of The Japanese and International Economies
ER -