For the last sentence of the penultimate paragraph, is it increasing / decreasing? So general idea you are positing is that as poor countries become more productive, there are more goods that they can produce relative to trade costs that are competitive on the world markets, so we should see the diversity of exports increase?
I'm confused for your initial explanation of introducing a wage into in England / Portugal model. If one country makes all the goods, how does the other country consume anything? Do they get endowments outside of wages in that model?
Also an even more basic question, but what exactly does the gravity model reveal? Is it saying that big countries trade more than would be expected given their proportional share of world population? Like if you ignored trade costs + assumed identical productivity across countries and said every country will trade a fixed amount of exports + imports per capita, then big countries will trade more, but that doesn't seem especially interesting. China and the US both have quite low trade shares relative to GDP right? I should probably just read the papers.
I enjoyed the article. You are adept at presenting complex concepts in a manner I find helpful. Thank you.
Hi. Good article. Our view is here: https://bitcoinawareness.substack.com/p/prices-should-fall-forever
For the last sentence of the penultimate paragraph, is it increasing / decreasing? So general idea you are positing is that as poor countries become more productive, there are more goods that they can produce relative to trade costs that are competitive on the world markets, so we should see the diversity of exports increase?
I'm confused for your initial explanation of introducing a wage into in England / Portugal model. If one country makes all the goods, how does the other country consume anything? Do they get endowments outside of wages in that model?
Also an even more basic question, but what exactly does the gravity model reveal? Is it saying that big countries trade more than would be expected given their proportional share of world population? Like if you ignored trade costs + assumed identical productivity across countries and said every country will trade a fixed amount of exports + imports per capita, then big countries will trade more, but that doesn't seem especially interesting. China and the US both have quite low trade shares relative to GDP right? I should probably just read the papers.