Arnaud Costinot

Arnaud Costinot (born January 17th, 1978)[1] is a French-American economist. He is the Ford Professor of Economics at the Massachusetts Institute of Technology. He was elected a member of the Econometric Society in 2021, and of the American Academy of Arts and Sciences in 2023.[2][3] Costinot is known for his work in trade theory.

Career

He was a professor from 2005 to 2008 at the University of California, San Diego, before joining at MIT. He received his Ph.D. in Economics from Princeton in 2005.

Work

Costinot is best known for his 2012 paper “New Trade Models, Same Old Gains?” with Costas Arkolakis and Andres Rodriguez-Clare.[4] The increasing availability of firm-level microdata allowed economists to be much more specific in their predictions about trade. Firms are heterogenous, and vary widely in their production functions. The Melitz model of trade, and its later extension with Ottoviano, predicts that when the cost of exporting falls, the more efficient firms take advantage of it. They benefit more from the expansion in market size than they are hurt by the increase in competition.[5]

Arkolakis, Costinot, and Rodriguez-Clare showed that, for a large class of trade models including Eaton and Kortum (2002),[6] Krugman,[7][8] the gains from trade depend only on the share of expenditure on domestic goods, and the elasticity of imports with respect to trade costs. Plugging in estimates for those two parameters gives a range of the gains from trade of .7-1.4 percent. With the Melitz model, these results hold under conditions of a Pareto distribution of firm productivity.[9]

Arkolakis, Costinot, and Rodriguez-Clare, with Dave Donaldson, extended their work to analyze the gains from trade under variable markups, in "The Elusive Pro-Competitive Effects of Trade". The gains from a country opening up their markets to trade may increase competition, and reduce the markups of domestic firms. On the other hand, foreign firms might be able to increase their markups. When we drop the assumption of CES utility (which necessitates constant markups), the welfare impact can by summarized by a constant multiplied by the welfare impact of trade under CES utility. Plugging in parameter estimates shows that opening trade need not improve allocation. The positive change to domestic firms is offset by the negative change to foreign firms.[10]

Costinot and Donaldson, looked at the effects of the economic integration of the United States on agriculture more generally, using a dataset of the potential productivity of every section of land for every crop in the United States. This allowed them to estimate the optimal combination of crops absent trade barriers, and calculate how far trade barriers prevent optimal outcomes. They reported that up to 80% of the economic growth of agriculture between 1880 and 1997 was due to trade.[11] Costinot and Donaldson, with Cory Smith, scaled this globally and applied it to climate change. The reported that allowing production patterns to adjust would substantially mitigate damages to crops, with international trade having only a limited role.[12][13][14] Costinot and Donaldson also used this dataset to report that Ricardian comparative advantage explains the pattern of agricultural trade around the world.[15][16]

References

  1. ^ "Arnaud Costinot (CV)" (PDF).
  2. ^ "Current Fellows".
  3. ^ "Eight from MIT elected to American Academy of Arts and Sciences for 2023". 24 April 2023.
  4. ^ Arkolakis, Costas; Costinot, Arnaud; Rodríguez-Clare, Andrés (2012-02-01). "New Trade Models, Same Old Gains?". American Economic Review. 102 (1): 94–130. doi:10.1257/aer.102.1.94. hdl:1721.1/61737. ISSN 0002-8282.
  5. ^ Melitz, Marc J; Trefler, Daniel (2012-05-01). "Gains from Trade when Firms Matter". Journal of Economic Perspectives. 26 (2): 91–118. doi:10.1257/jep.26.2.91. ISSN 0895-3309.
  6. ^ Eaton, J., & Kortum, S. (2002). Technology, Geography, and Trade. Econometrica, 70(5), 1741–1779. http://www.jstor.org/stable/3082019
  7. ^ Krugman, Paul (1980). "Scale Economies, Product Differentiation, and the Pattern of Trade". The American Economic Review. 70 (5): 950–959. ISSN 0002-8282. JSTOR 1805774.
  8. ^ Melitz, Marc J. (November 2003). "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity". Econometrica. 71 (6): 1695–1725. doi:10.1111/1468-0262.00467. ISSN 0012-9682.
  9. ^ Melitz, Marc J.; Redding, Stephen J. (2015-03-01). "New Trade Models, New Welfare Implications". American Economic Review. 105 (3): 1105–1146. doi:10.1257/aer.20130351. ISSN 0002-8282.
  10. ^ Arkolakis, Costas; Costinot, Arnaud; Donaldson, Dave; Rodríguez-Clare, Andrés (2018-01-10). "The Elusive Pro-Competitive Effects of Trade". The Review of Economic Studies. doi:10.1093/restud/rdx075. ISSN 0034-6527.
  11. ^ "A trade economist wins the John Bates Clark medal". The Economist.
  12. ^ Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World Arnaud Costinot, Dave Donaldson, and Cory Smith Journal of Political Economy 2016 124:1, 205-248
  13. ^ "Can trade compensate for farms lost to climate change?".
  14. ^ "Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from a 9 Million-Field Partition of the Earth" (PDF).
  15. ^ Costinot, Arnaud; Donaldson, Dave (2012-05-01). "Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence". American Economic Review. 102 (3): 453–458. doi:10.1257/aer.102.3.453. ISSN 0002-8282.
  16. ^ ARNAUD COSTINOT and DAVE DONALDSON. "Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence" (PDF).
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