Rethinking revealed comparative advantage with micro and macro data

Huang, Hanwei and Ottaviano, Gianmarco Ireo Paolo (2023) Rethinking revealed comparative advantage with micro and macro data. CEP Discussion Papers (CEPDP1964). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

The Balassa's index of revealed comparative advantage does not necessarily reveal Ricardian comparative advantage. We propose an alternative sufficient statistics approach based on a quantitative standard trade model incorporating firm and product selection. We show that the model's micro foundations do not necessarily imply that the relevant data for the proposed sufficient statistics must include micro information, but its micro structure is needed to understand how only macro information can be used instead. Applying our approach to Chinese micro data and cross-country macro data, we find that firm behavior has far-reaching implications for understanding aggregate productivity and revealed comparative advantage.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2023 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HB Economic Theory H Social Sciences > HA Statistics
JEL classification:	C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology; Computer Programs > C80 - General C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C10 - General
Date Deposited:	24 Jan 2024 17:54
Last Modified:	11 Dec 2024 19:50
URI:	http://eprints.lse.ac.uk/id/eprint/121284

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