Dynamic Models, New Gains from Trade?
18 November 2025 5:45 pm CET
Christoph Boehm (Associate Professor at UT Austin and Research Associate at the National Bureau of Economic Research) presents his research (jointly with Andrei Levchenko, Nitya Pandalai-Nayar, and Hiroshi Toma) in the Vienna International Economics Seminar (VIES) series
In cooperation with CEU, FIW, Universität Wien, WIFO, WIIW and WU.
Venue
University of Vienna at the Faculty of Business, Economics and Statistics
Oskar-Morgenstern-Platz 1
1090 Vienna
2nd floor, HS17, entrance towards Hahngasse
Description
Yes. We state closed-form expressions for steady state gains from trade that apply in a class of dynamic trade models that includes dynamic versions of the Krugman (1980), Melitz (2003), and customer capital (e.g., Arkolakis, 2010) models. The gains are a function of the domestic trade share and the long-run elasticity of trade with respect to iceberg trade costs, similar to Arkolakis, Costinot, and Rodríguez-Clare (2012). In a dynamic setting, this long-run elasticity cannot be estimated in one step by relying on tariff variation as shifters of trade costs. Instead, it can be recovered by combining two tariff elasticity estimates: the long- and the short-run. Thus, the short-run tariff elasticity indirectly enters the formula for the steady state gains from trade. Our main substantive finding is that the gains from trade are large. They depend crucially on the short-run tariff elasticity, and can be arbitrarily large even if the long-run tariff elasticity is high. Accounting for the transition path has a modest impact on the magnitude of the gains from trade, relative to simply comparing steady states.
Speaker
Registration
Participants are requested to register in advance with Julia Hnidek
The VIES seminar is dedicated to frontier research in international economics and features presentations by renowned international scholars.
The VIES is a joint initiative of CEU, FIW, Universität Wien, WIFO, wiiw and WU.