BA Seminars in Economics
La Facultad de Ciencias Económicas de la Universidad de Buenos Aires (UBA) será la anfitriona en esta oportunidad del Buenos Aires Seminars in Economics (BASE), programado para el día miércoles 1 de agosto a las 11hs. en el aula 454 , edificio Anexo.
El Profesor Marco Gonzalez-Navarro presentará “A New Engel on the Gains from Trade” (David Atkin, Benjamin Faber, Thibault Fally and Marco Gonzalez-Navarro; July 2018).
Buenos Aires Seminars in Economics (BASE) es una serie de seminarios organizada conjuntamente por la Dirección de Investigación de CAF, Investigaciones Económicas del BCRA y los Departamentos de Economía de la Universidad Nacional de La Plata, la Universidad de San Andrés, la Universidad Torcuato Di Tella y la Universidad de Buenos Aires. BASE pretende acercar a Buenos Aires a reconocidos investigadores internacionales en los campos de la economía del trabajo, desarrollo, economía política, comercio, entre otros, para interactuar con el mundo académico local.
Measuring the gains from trade and their distribution is challenging. Recent empirical contributions have addressed this challenge by drawing on rich and newly available sources of microdata to measure changes in household nominal incomes and price indices. While such data have become available for some components of household welfare, and for some locations and periods, they are not available in most empirical settings. In this paper, we propose and implement an alternative approach that uses rich, but widely available, expenditure survey microdata to estimate theory-consistent and exact changes in income-group specific price indices and welfare. Our approach builds on existing work that uses linear Engel curves and changes in expenditure on income-elastic goods to infer unobserved real incomes. A major shortcoming of this approach is that while based on non-homothetic preferences, the price indices it recovers are homothetic and hence are neither theory consistent nor suitable for distributional analysis when relative prices are changing. To make progress, we show that we can recover changes in income-specific price indices and welfare from horizontal shifts in Engel curves if preferences are quasi-separable (Gorman, 1970; 1976) and we focus on what we term “relative Engel curves”. Our approach is flexible enough to allow for the highly non-linear Engel curves we document in the data, and for non-parametric estimation at each point of the income distribution. We first implement this approach to estimate changes in cost of living and household welfare using Indian microdata. We then revisit the impacts of India’s trade reforms across regions.
Keywords: Gains from trade, household welfare, price indices, non-homothetic preferences, Engel curves.
Expositor: Marco Gonzalez-Navarro
Is a new assistant professor in the department of Agricultural and Resource Economics at UC-Berkeley. His research is in Development Economics and Urban Economics. He has written on subway infrastructure, retail globalization in emerging markets, rural land titling, road infrastructure, crime, and political economy. His work has been published in the American Economic Review, Journal of Political Economy, Review of Economics and Statistics, American Economic Journal: Applied Economics, and Journal of Development Economics. Currently, he is working on the effects of subway transportation systems on urban air pollution, and on how improved water access reduces clientelistic behavior among citizens in rural Brazil, thereby improving local democratic functioning. He received his B.A. in economics from ITAM in Mexico, his Ph.D. in Economics at Princeton University, and was a Robert Wood Johnson Postdoc toral Scholar at UC-Berkeley before spending six years as an assistant professor at University of Toronto. He is a J-PAL and CEGA affiliate.