Paper #1529

Títol:

Information globalization

Autors:

Isaac Baley, Laura Veldkamp i Michael Waugh

Data:

Març 2016 (Revisió: Febrer 2019)

Resum:

Common wisdom dictates that uncertainty impedes trade—we show that uncertainty can fuel more trade in a simple general equilibrium trade model with information frictions. In equilibrium, increases in uncertainty increase both the mean and the variance in returns to exporting implying that trade can increase or decrease with uncertainty depending on preferences. Under general conditions on preferences, we characterize the importance of these forces using a sufficient statistics approach. Higher uncertainty leads to increases in trade because agents receive improved terms of trade, particularly in states of nature where consumption is most valuable. Trade creates value, in part, by offering a mechanism to share risk and risk sharing is most effective when both parties are uninformed.

Paraules clau:

information asymmetry, globalization, risk sharing, international trade

Codis JEL:

D5, D8, D9, F4, F6

Àrea de Recerca:

Macroeconomia i Economia Internacional

Publicat a:

Journal of International Economics, Vol.126, September 2020
Amb el títol:
Can Global Uncertainty Promote International Trade?

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