Topic: Knowledge Diffusion, Trade and Innovation across Countries and Sectors

Speaker: CAI Jie

Abstract: We develop a quantifiable multi-country, multi-sector endogenous growth model in which comparative advantage is endogenously determined by innovation and knowledgediffusion. We quantify the effect of a trade liberalization on innovation, comparative advantage and welfare. Changes in trade frictions reallocate innovation and comparativeadvantage across sectors: innovation reallocates towards sectors with larger increases in comparative advantage, and comparative advantage reallocates towards sectors withstronger knowledge spillovers. Knowledge spillovers amplify the effect as countries and sectors benefit from technology developed elsewhere. In contrast to one-sector modelswithout knowledge spillovers, we find significant dynamic gains from trade, driven by innovation and diffusion.

Date: May 8, 2019

Time: 16:00-17:30

Location: Room 702, Main Building, City Campus, CUFE