American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Trade, Value Added, and Productivity Linkages: A Qualitative Analysis
American Economic Journal: Macroeconomics
(pp. 149–86)
Abstract
Traditional international real business cycle (IRBC) models produce a weak relationship between trade and cross-country real GDP (RGDP) correlations (corrRGDP), contradicting empirical findings. We reassess this quantitative puzzle in a many-country model featuring (i) global value chains, (ii) monopolistic competition, (iii) fluctuations in the number of varieties, and (iv) RGDP measurement using double deflation. In this framework, fluctuations in imported inputs cause profit and efficiency variations, reflected in measured GDP and productivity fluctuations. Using actual variations in trade linkages, the model replicates 70 percent of observed bilateral trade linkages to corrRGDP slope and 60 percent of productivity correlation slope.Citation
de Soyres, François, and Alexandre Gaillard. 2026. "Trade, Value Added, and Productivity Linkages: A Qualitative Analysis." American Economic Journal: Macroeconomics 18 (1): 149–86. DOI: 10.1257/mac.20210192Additional Materials
JEL Classification
- E13 General Aggregative Models: Neoclassical
- E23 Macroeconomics: Production
- E32 Business Fluctuations; Cycles
- F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F23 Multinational Firms; International Business
- F44 International Business Cycles
- L14 Transactional Relationships; Contracts and Reputation; Networks