Ricardian Structural Change
Light catering will be served from 12:30. The talk will begin at 13:00
What is the contribution of Ricardian specialization subject to comparative advantage in driving the process of structural transformation? To address this question, I interpret the changes in manufacturing value added shares in twenty developed and developing economies between years 1965 and 2011 through a lens of a structural model. To do so, I embed the standard mechanisms that generate structural change in a closed economy into a Ricardian model of trade, where international sourcing decisions reflect the relative costs across the potential suppliers. In counterfactual analysis, I show that even if household sectoral expenditure shares do not respond to changing relative prices or incomes, the changes in sectoral productivities, trade costs, and aggregate trade imbalances induce changes in sourcing decisions that account for a third of the observed changes in manufacturing shares over the period. Additionally, I show that Ricardian forces are key for understanding structural change beyond the hump-shaped pattern in manufacturing shares: first, in terms of the heterogeneous experiences of structural change in different economies, and second, in terms of the heterogeneous behavior of individual sub-sectors within manufacturing broadly defined.
Date: 9 March 2023, 13:00 (Thursday, 8th week, Hilary 2023)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Lidia Smitkova (University of Oxford)
Organising department: Department of Economics
Part of: Department of Economics Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Emma Heritage