Publications [#369022] of Rafael Dix-Carneiro

Journal Articles

1. Dix-Carneiro, R; Pessoa, JP; Reyes-Heroles, R; Traiberman, S, Globalization, Trade Imbalances, and Labor Market Adjustment*, Q J Econ (January, 2023), pp. qjac043 [doi]
   (last updated on 2024/12/31)

   Abstract:
   We argue that modeling trade imbalances is crucial for understanding transitional dynamics in response to globalization shocks. We build and estimate a general equilibrium, multicountry, multisector model of trade with two key ingredients: (i) endogenous trade imbalances arising from households’ consumption and saving decisions; (ii) labor market frictions across and within sectors. We use our model to perform several empirical exercises. We find that the “China shock” accounted for 28% of the decline in U.S. manufacturing between 2000 and 2014—1.65 times the magnitude predicted from a model imposing balanced trade. A concurrent rise in U.S. service employment led to a negligible aggregate unemployment response. We benchmark our model’s predictions for the gains from trade against the popular ACR sufficient-statistics approach. We find that our predictions for the long-run gains from trade and consumption dynamics significantly diverge.