Publication

In this paper, the authors present a standard quality ladders endogenous growth model. It is argued that it takes time for firms to learn how to export. In particular, consistent with the empirical evidence, the report finds that trade liberalization leads to a higher exit rate of firms, that exporters charge higher prices for their products as well as higher markups, and that many large firms do not export. Furthermore, the authors argue that trade liberalization promotes economic growth and that it has the opposite effect of retarding economic growth in a closely comparable growth model with Melitz-type assumptions.