Trade, Domestic Frictions, and Scale Effects
(2016)
Journal Article
Ramondo, N., Rodríguez-Clare, A., & Saborío-Rodríguez, M. (2016). Trade, Domestic Frictions, and Scale Effects. American Economic Review, 106(10), 3159-3184. https://doi.org/10.1257/aer.20141449
Because of scale effects, idea-based growth models imply that larger countries should be much richer than smaller ones. New trade models share the same counterfactual feature. In fact, new trade models exhibit other counterfactual implications associ... Read More about Trade, Domestic Frictions, and Scale Effects.