A Balls-and-Bins Model of Trade: Comment
American Economic Review
vol. 106,
no. 3, March 2016
(pp. 843-51)
Abstract
We show that the Armenter and Koren model's firm-product-country results rely on the assumption that export shipment size is independent of firm size, and this assumption is contradicted by the data. When actual shipment sizes are used in the balls-and-bins model, it cannot reproduce the data on single product/single country exporters. Beyond just showing that the shipment size assumption matters to balls-and-bins outcomes, our results highlight the important fact that shipment size is an economic decision, co-determined with other export choices. For this reason, we argue that a balls-and-bins model cannot be a purely statistical benchmark model. (JEL F11, F14, O13, O19, Q37)Citation
Blum, Bernardo S., Sebastian Claro, and Ignatius J. Horstmann. 2016. "A Balls-and-Bins Model of Trade: Comment." American Economic Review, 106 (3): 843-51. DOI: 10.1257/aer.20140372Additional Materials
JEL Classification
- F11 Neoclassical Models of Trade
- F14 Empirical Studies of Trade
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O19 International Linkages to Development; Role of International Organizations
- Q37 Nonrenewable Resources and Conservation: Issues in International Trade