Seminar in Economics | with Nicolas Schutz
Welcome to this Higher Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Nicolas Schutz, a Professor of Economics at the University of Mannheim, who will present "Gravity with Granularity".
We demonstrate that the estimation of gravity equations of trade flows suffers from an omitted variable bias when firms are granular and behave oligopolistically. We show how to correct for this bias in the estimation of both firm-level and aggregate gravity. Using French and Chinese export data, we find that the oligopoly bias leads to a substantial underestimation of the effects of distance on trade flows. In a calibrated version of the model, the welfare gains from a trade liberalization are found to be almost twice as large under oligopoly as under monopolistic competition.
More about the Speaker
The seminar takes place at Stockholm School of Economics, Sveavägen 65, room 750.
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