A Model of Trade with Ricardian Comparative Advantage and Intra-sectoral Firm Heterogeneity

In this paper, we merge the heterogenous firm trade model of Melitz (2003) with the Ricardian model of Dornbusch, Fisher and Samuelson (DFS 1977) to explain how the pattern of international specialization and trade is determined by the interaction of comparative advantage, economies of scale, country sizes and trade barriers. The model is able to capture the existence of inter-industry trade and intra-industry trade in a single unified framework. It explains how trade openness affects the pattern of international specialization and trade. It generalizes Melitz’s firm selection effect in the face of trade liberalization to a setting where the patterns of inter-industry trade and intra-industry are endogenous. Although opening to trade is unambiguously welfare-improving in both countries, trade liberalization can lead to an counter-Melitz effect in the larger country if it is insufficiently competitive in the sectors where it has the strongest comparative disadvantage but still produces. In this case, the operating productivity cutoff is lowered while the exporting cutoff increases in the face of trade liberalization. This is because the intersectoral resource allocation (IRA) effect dominates the Melitz effect in these sectors. Consequently, the larger country can lose from trade liberalization. Some hypotheses related to firms’ exporting behavior across sectors upon opening up to trade and upon trade liberalization are also derived. Analyses of firm-level data of Chinese manufacturing sectors confirm these hypotheses.inter-industry trade, intra-industry trade, heterogeneous firms, trade liberalization

Global gains from trade liberalization

What has been the overall global welfare impact of the accession to the World Trade Organization of a large country like China, or the global welfare impact of the completion of the Uruguay round of GATT negotiations? Can we come up with a simple user-friendly formula to calculate the global welfare impact of the simultaneous trade liberalization of a number of countries? How sensitive is the answer to the assumption of the trade model? We find a striking answer to these questions. We find that, for a very broad class of models and settings, the global welfare impact of trade liberalization in a country, or a simultaneous liberalization of a number of countries, is given by the same simple formula. We find that the global welfare impact of the simultaneous trade liberalization of different countries only depends on two sets of statistics: (i) the ratio of the value of bilateral trade between each and every pair of trading partners and global income; and (ii) the change in exporting cost for each and every pair of trading partners. Most interestingly, the formula applies to a very broad class of models and settings, which include the general Ricardian model (including, for example, Anderson, 1979, and Eaton and Kortum, 2002), the models of Krugman (1980), Melitz (2003) and its extensions, and the extensions of these models to the multi-sectoral case, multi-factor production technology, multi-stage production, the existence of tradable intermediate goods and the existence of a large outside good sector in each country. We find that global welfare would have been 0.05% lower in the year 2008 if China had not gained accession to the WTO in 2001

Imported-input Trade Liberalization and Firms' Export Performance in China: Theory and Evidence

The literature on trade liberalization has recently shifted its attention from trade liberalization in imported final goods to studying the effects of trade liberalization in imported intermediate inputs. This emphasis fits very well the trade liberalization experience of China following its accession to the WTO in 2001. We build a multi-sector heterogenous-firm model with trade in both intermediate goods and final goods, and we ask: How do final-goods producers respond to trade liberalization in imported inputs? Do they respond differently across sectors? How do firms respond differently to trade liberalization in imported-outputs instead? We decompose the total effect of trade liberalization into those caused by inter-sectoral resource allocation (IRA) and by within-sector selection of firms according to productivity (which we call Melitz selection effect). It is the IRA effect that gives rise to differential impacts of trade liberalization in different sectors. These impacts include changes in the probability of entry into the export market, the fraction of firms that export and the share of export revenue. We test our hypotheses using Chinese firm-level data for the years after China’s accession to WTO in 2001. The results generally support our hypotheses

Finishing the euchromatic sequence of the human genome

The sequence of the human genome encodes the genetic instructions for human physiology, as well as rich information about human evolution. In 2001, the International Human Genome Sequencing Consortium reported a draft sequence of the euchromatic portion of the human genome. Since then, the international collaboration has worked to convert this draft into a genome sequence with high accuracy and nearly complete coverage. Here, we report the result of this finishing process. The current genome sequence (Build 35) contains 2.85 billion nucleotides interrupted by only 341 gaps. It covers ∼99% of the euchromatic genome and is accurate to an error rate of ∼1 event per 100,000 bases. Many of the remaining euchromatic gaps are associated with segmental duplications and will require focused work with new methods. The near-complete sequence, the first for a vertebrate, greatly improves the precision of biological analyses of the human genome including studies of gene number, birth and death. Notably, the human enome seems to encode only 20,000-25,000 protein-coding genes. The genome sequence reported here should serve as a firm foundation for biomedical research in the decades ahead

Guidelines for the use and interpretation of assays for monitoring autophagy (3rd edition)

In 2008 we published the first set of guidelines for standardizing research in autophagy. Since then, research on this topic has continued to accelerate, and many new scientists have entered the field. Our knowledge base and relevant new technologies have also been expanding. Accordingly, it is important to update these guidelines for monitoring autophagy in different organisms. Various reviews have described the range of assays that have been used for this purpose. Nevertheless, there continues to be confusion regarding acceptable methods to measure autophagy, especially in multicellular eukaryotes. For example, a key point that needs to be emphasized is that there is a difference between measurements that monitor the numbers or volume of autophagic elements (e.g., autophagosomes or autolysosomes) at any stage of the autophagic process versus those that measure fl ux through the autophagy pathway (i.e., the complete process including the amount and rate of cargo sequestered and degraded). In particular, a block in macroautophagy that results in autophagosome accumulation must be differentiated from stimuli that increase autophagic activity, defi ned as increased autophagy induction coupled with increased delivery to, and degradation within, lysosomes (inmost higher eukaryotes and some protists such as Dictyostelium ) or the vacuole (in plants and fungi). In other words, it is especially important that investigators new to the fi eld understand that the appearance of more autophagosomes does not necessarily equate with more autophagy. In fact, in many cases, autophagosomes accumulate because of a block in trafficking to lysosomes without a concomitant change in autophagosome biogenesis, whereas an increase in autolysosomes may reflect a reduction in degradative activity. It is worth emphasizing here that lysosomal digestion is a stage of autophagy and evaluating its competence is a crucial part of the evaluation of autophagic flux, or complete autophagy. Here, we present a set of guidelines for the selection and interpretation of methods for use by investigators who aim to examine macroautophagy and related processes, as well as for reviewers who need to provide realistic and reasonable critiques of papers that are focused on these processes. These guidelines are not meant to be a formulaic set of rules, because the appropriate assays depend in part on the question being asked and the system being used. In addition, we emphasize that no individual assay is guaranteed to be the most appropriate one in every situation, and we strongly recommend the use of multiple assays to monitor autophagy. Along these lines, because of the potential for pleiotropic effects due to blocking autophagy through genetic manipulation it is imperative to delete or knock down more than one autophagy-related gene. In addition, some individual Atg proteins, or groups of proteins, are involved in other cellular pathways so not all Atg proteins can be used as a specific marker for an autophagic process. In these guidelines, we consider these various methods of assessing autophagy and what information can, or cannot, be obtained from them. Finally, by discussing the merits and limits of particular autophagy assays, we hope to encourage technical innovation in the field

A Model of Trade with Ricardian Comparative Advantage and Intra-sectoral Firm Heterogeneity

In this paper, we merge the heterogenous firm model of Melitz (2003) with the Ricardian model of Dornbusch, Fisher and Samuelson (DFS 1977) to explain how the pattern of international specialization and trade is determined by the interaction of comparative advantage, economies of scale, country sizes and trade barriers. The model is able to capture the existence of inter-industry trade and intra-industry trade in a single unified framework. It explains how trade openness affects the pattern of international specialization and trade. It generalizes Melitz’s firm selection effect in the face of trade liberalization to a setting where the patterns of inter-industry trade and intra-industry are endogenous. Although trade openness is proved to be unambiguously welfare-improving in both countries, trade liberalization can lead to an anti-Melitz effect in the larger country if it is sufficiently uncompetitive in the sectors in which it has the strongest comparative disadvantage but in which it still produces. In this case, the operating productivity cutoff is lowered while the exporting cutoff increases in the face of trade liberalization. This is because the DFS effect dominates the Melitz effect in these sectors. Consequently, the larger country can lose from trade liberalization. 0 version 6e1

Fragmentation and Gains from Trade

In this paper, we estimate the competitiveness of countries in intermediate goods and in final goods. We find that China’s competitiveness in both intermediate goods and final goods increased exceptionally rapidly during 1995-2011. We also find that the gains from trade of countries with strong comparative advantage in final goods can be substantially under-estimated if we do not separately take into account trade flows in intermediate goods and final goods. We also find that, during 1995-2011, the average increase in gains from intermediate goods trade across all countries in our sample is distinctly higher than the average increase in gains from final goods trade. This suggests that gains from trade due to international fragmentation of production is becoming more important over time relative to gains from trade in final goods.54 p