Ana Cecilia Fieler | Ph.D. Candidate

“Non-Homotheticity and Bilateral Trade: Evidence and a Quantitative Explanation”
Econometrica, 79(4), p. 1069-1101, July 2011, appendix, program and data files

"Trade, Quality Upgrading, and Input Linkages: A Theory with Evidence from Colombia," with Marcela Eslava and Daniel Yi Xu, September 2016, appendix, revise and resubmit at American Economic Review

"Gravity of Unit Prices" with Jonathan Eaton (draft coming soon)

Unit prices in bilateral trade data increase in importer and exporter per capita income.  This finding has gathered attention in the literature, because it suggests that rich and poor countries may be differently affected by shocks to international trade since they produce and consume different types of goods. The usual way of interpreting patterns in unit prices uses only one dimension of quality (i.e., product appeal): High-quality goods are more income elastic, and rich countries specialize in high-quality goods.  We argue that one dimension of quality is not sufficient to explain systematic patterns in trade data.

We develop a tractable model with two dimensions of quality. All consumers prefer higher quality, but one dimension is disproportionately valued by high-income consumers, and the other is equally valued by all consumers. We estimate the model using data on value and unit prices of bilateral trade flows. Quality-related parameters are estimated using simple regressions of unit prices and importer and exporter characteristics.  The model replicates data on unit prices very well, and at the same time, it delivers a gravity specification for trade flows. This result suggests that unit prices are not informative about the differences in the welfare effects of trade between rich and poor countries.

We present two extensions of the model. First, we allow for per-unit trade cost to rationalize the increasing relationship between unit prices and distance. Second, the model remains tractable when we introduce heterogeneity across sectors in the relationship between unit prices, and importer and exporter per capita income.

"Home-Market Effects on Innovation" with Justin Caron and Thibault Fally
(draft coming soon)

We estimate the home-market effect and study its implications for inequality within and across countries. The home-market effect occurs when exogenous differences in demand across countries generate endogenous differences in comparative advantages through technical change that is specific to a country and sector. Estimating it has proved difficult because econometricians do not observe differences in demand. They observe only expenditures, which depends on supply through prices. Our solution is to exploit non-homotheticity in preferences to construct instruments for the location of production, which determines comparative advantage through the home-market effect.

We develop and estimate a model where sectors differ in their income-elasticity of demand. On the supply side, a research sector develops technologies that are specific to countries, goods and factors. Technologies diffuse imperfectly across countries. Consistent with data, income-elastic goods in the model are endogenously more skill intensive within countries. A special case is the standard model of home-market-effect, with technologies that vary only by country and industry (not factors), and technologies that do not diffuse.  This special case yields biased estimates for the home-market effect and cannot explain patterns in the data that are reconciled by the general model.

Home-market effects generate across-country inequalities because countries differ in their access to larger, richer markets. They generate within-country inequalities through skill-biased technical change. We use counterfactual simulations using the estimated model to evaluate the effects of trade and technology diffusion on inequalities.

"Growth and Product Cycles" with Gustavo Camilo

Non-refereed publications
"(Indirect) Input Linkages" American Economic Review: Papers & Proceedings, 105(5), p. 662-666, 2015

“Mapping the Match between UK Exports and Demand in Emerging Markets: Final Report for the Asia Task Force”, joint with Jonathan Eaton and Ana Maria Santacreu, a report prepared for the United Kingdom Trade & Investment ( UK government organization)

Dormant papers

“Quality Differentiation in International Trade: Theory and Evidence” working paper, 2012, appendix

“Models of Repeated Partnership with Limited Information” mimeo, 2004

Copyright 2007 Ana Cecilia Fieler. Site by CM.