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Trade-Revealed TFP (2007)
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BibTeX
@TECHREPORT{Finicelli07trade-revealedtfp,
author = {Andrea Finicelli and Patrizio Pagano and Massimo Sbracia},
title = {Trade-Revealed TFP},
institution = {},
year = {2007}
}
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Abstract
This paper pursues a novel methodology, based on the trade model of Eaton and Kortum (2002), to estimate TFP levels, relative to the US, for the manufacturing sector of 18 OECD countries from 1985 to 2002. In the model, …rms have technologies described by a probability distribution, with parameters related to absolute and comparative advantages. We show that manufacturing TFP is a function of these advantages, augmented by a measure of trade openness. Our results shed light on the role of international competition in selecting …rms with higher productivity. In our sample, international competition raised manufacturing TFP by an average 7 % — a contribution quite diversi…ed across countries and with a common upward trend. Finally, we focus on Italy’s relative TFP and compare it with one obtained from development accounting as well as with estimates available from national sources.
