Distribution Capital and the Short- and Long-Run Import Demand Elasticity

@inproceedings{Crucini2013DistributionCA,
  title={Distribution Capital and the Short- and Long-Run Import Demand Elasticity},
  author={Mario J. Crucini and Jonathan Scott Davis},
  year={2013}
}
The elasticity of substitution between home and foreign goods is one of the most important parameters in international economics. The international macro literature, which is primarily concerned with short-run business cycle fluctuations, assigns a low value to this parameter. The international trade literature, which is more concerned with long-run changes in trade flows following a change in relative prices, assigns a high value to this parameter. This paper constructs a model where this… CONTINUE READING

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