{"id":{"repo_id":"cambridge","oai_identifier":"oai:www.repository.cam.ac.uk:1810/349668"},"canonical_url":"https://search.dev.ndltd.org/etd/cambridge/oai:www.repository.cam.ac.uk:1810/349668","repository":{"repo_id":"cambridge","name":"Cambridge University","base_url":"https://api.repository.cam.ac.uk/server/oai/request"},"display":{"title":"Essays on Production Structure and Economic Integration","abstract":"In this dissertation, I present three chapters that study the linkages between the structural makeup of economies and the process of trade- and financial liberalization. In the first chapter I examine the role of trade and external deficits in explaining the patterns of structural change in twenty developed and developing economies between 1965 and 2000. First, for each country, I break down the time series of manufacturing value added share into a secular trend and a trade-induced deviation from the trend. I show that national differences are in large part due to trade. Second, I investigate changes in sectoral productivity, trade costs and trade deficits as the driving forces behind the patterns in the data. To do this I build a multi-sector Eaton and Kortum (2002) model and simulate the effects of different shocks on the manufacturing value added shares in the sample. While calibrating the model, I develop a novel method of identifying trade cost- and productivity shocks, which makes use of symmetry restrictions on sectoral trade cost shocks. I calibrate the model at a two-digit level of disaggregation, which permits me to study not only the changes in the manufacturing share, but also its composition at a sub-sectoral level. I find that open economy forces are responsible for 32% of the observed change in the manufacturing shares in my sample, and for 39% if the composition of the manufacturing sector is taken into account. Focusing on individual shocks, I show that for the aggregate manufacturing share, trade cost- and aggregate trade deficit shocks played the biggest role, whereas the productivity shocks mattered more in driving the composition of manufacturing. In the second chapter, I study financial liberalization between economies that differ in their overall competitiveness. I first show that if firms compete oligopolistically, then competitiveness --- relatively low aggregate unit costs of production --- is a feature of an economy with a fatter tailed productivity distribution and relatively more very large --- `superstar’ --- firms. Embedding this setup in a two-country model with heterogeneous agents and non-homothetic saving behaviour, I show that if the home is more competitive, then: (1) it enjoys a higher aggregate profit rate than foreign; (2) its autarkic interest rate is lower than that in foreign; (3) should the two economies undergo financial liberalization, the capital will be flowing from home to foreign; (4) if one of the sectors is non-tradable, the capital inflows push up the wages in foreign, leading to further losses of competitiveness and to current account overshooting. In the third chapter, I calibrate the quantitative version of the model developed in Chapter 2 to eight European economies on the eve of the Global Financial Crisis. I show that the competitiveness gap can explain 27% of variation in the current account imbalances incurred in the period. I conclude by discussing policies for rebalancing.","abstract_html":"In this dissertation, I present three chapters that study the linkages between the structural makeup of economies and the process of trade- and financial liberalization. In the first chapter I examine the role of trade and external deficits in explaining the patterns of structural change in twenty developed and developing economies between 1965 and 2000. First, for each country, I break down the time series of manufacturing value added share into a secular trend and a trade-induced deviation from the trend. I show that national differences are in large part due to trade. Second, I investigate changes in sectoral productivity, trade costs and trade deficits as the driving forces behind the patterns in the data. To do this I build a multi-sector Eaton and Kortum (2002) model and simulate the effects of different shocks on the manufacturing value added shares in the sample. While calibrating the model, I develop a novel method of identifying trade cost- and productivity shocks, which makes use of symmetry restrictions on sectoral trade cost shocks. I calibrate the model at a two-digit level of disaggregation, which permits me to study not only the changes in the manufacturing share, but also its composition at a sub-sectoral level. I find that open economy forces are responsible for 32% of the observed change in the manufacturing shares in my sample, and for 39% if the composition of the manufacturing sector is taken into account. Focusing on individual shocks, I show that for the aggregate manufacturing share, trade cost- and aggregate trade deficit shocks played the biggest role, whereas the productivity shocks mattered more in driving the composition of manufacturing. In the second chapter, I study financial liberalization between economies that differ in their overall competitiveness. I first show that if firms compete oligopolistically, then competitiveness --- relatively low aggregate unit costs of production --- is a feature of an economy with a fatter tailed productivity distribution and relatively more very large --- `superstar’ --- firms. Embedding this setup in a two-country model with heterogeneous agents and non-homothetic saving behaviour, I show that if the home is more competitive, then: (1) it enjoys a higher aggregate profit rate than foreign; (2) its autarkic interest rate is lower than that in foreign; (3) should the two economies undergo financial liberalization, the capital will be flowing from home to foreign; (4) if one of the sectors is non-tradable, the capital inflows push up the wages in foreign, leading to further losses of competitiveness and to current account overshooting. In the third chapter, I calibrate the quantitative version of the model developed in Chapter 2 to eight European economies on the eve of the Global Financial Crisis. I show that the competitiveness gap can explain 27% of variation in the current account imbalances incurred in the period. I conclude by discussing policies for rebalancing.","abstract_has_math":false,"creators":["Smitkova, Lidia"],"institution":"University of Cambridge","degree_name":"Doctor of Philosophy (PhD)","degree_level":"Doctoral","degree_discipline":null,"degree_department":null,"school":null,"contributors":[],"advisors":["Cavalcanti, Tiago"],"committee_chairs":[],"committee_members":[],"year":2022,"date_issued":"2022-06-04","date_published":"2022-06-04","updated_at":"2026-07-22T22:24:28Z","subjects":["capital flows","international macroeconomics","structural change","trade"],"languages":["eng"],"rights":[],"rights_urls":["https://apollo8-f-pro.lib.cam.ac.uk/bitstreams/15c309eb-eb6f-4fee-b7ab-177d5ff365c0/download","http://purl.org/NET/rdflicense/allrightsreserved"],"identifier_entries":[]},"links":{"outbound_url":"https://doi.org/10.17863/CAM.96598","outbound_label":"DOI","outbound_source":"dc:identifier.doi"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor.advisor","label":"Advisor","values":["Cavalcanti, Tiago"]},{"key":"dc:creator","label":"Author","values":["Smitkova, Lidia"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date.issued","label":"Date","values":["2022-06-04"]},{"key":"dc:publisher.institution","label":"Dc Publisher Institution","values":["University of Cambridge"]},{"key":"dc:relation.isreferencedby.uri","label":"Dc Relation Isreferencedby URI","values":["https://www.repository.cam.ac.uk/handle/1810/349668"]},{"key":"dc:type","label":"Dc Type","values":["Thesis"]},{"key":"dc:type.qualificationlevel","label":"Dc Type Qualificationlevel","values":["Doctoral"]},{"key":"dc:type.qualificationname","label":"Dc Type Qualificationname","values":["Doctor of Philosophy (PhD)"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["capital flows","international macroeconomics","structural change","trade"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language","label":"Dc Language","values":["eng"]},{"key":"dc:rights","label":"Dc Rights","values":["https://apollo8-f-pro.lib.cam.ac.uk/bitstreams/15c309eb-eb6f-4fee-b7ab-177d5ff365c0/download","http://purl.org/NET/rdflicense/allrightsreserved"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier.doi","label":"DOI","values":["https://doi.org/10.17863/CAM.96598"]},{"key":"dc:identifier.uri","label":"Identifier URI","values":["https://apollo8-f-pro.lib.cam.ac.uk/bitstreams/fbb8afa5-3deb-4585-826c-38898d8cb394/download"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description.abstract","label":"Abstract","values":["In this dissertation, I present three chapters that study the linkages between the structural makeup of economies and the process of trade- and financial liberalization. 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I calibrate the model at a two-digit level of disaggregation, which permits me to study not only the changes in the manufacturing share, but also its composition at a sub-sectoral level. I find that open economy forces are responsible for 32% of the observed change in the manufacturing shares in my sample, and for 39% if the composition of the manufacturing sector is taken into account. Focusing on individual shocks, I show that for the aggregate manufacturing share, trade cost- and aggregate trade deficit shocks played the biggest role, whereas the productivity shocks mattered more in driving the composition of manufacturing. In the second chapter, I study financial liberalization between economies that differ in their overall competitiveness. I first show that if firms compete oligopolistically, then competitiveness --- relatively low aggregate unit costs of production --- is a feature of an economy with a fatter tailed productivity distribution and relatively more very large --- `superstar’ --- firms. Embedding this setup in a two-country model with heterogeneous agents and non-homothetic saving behaviour, I show that if the home is more competitive, then: (1) it enjoys a higher aggregate profit rate than foreign; (2) its autarkic interest rate is lower than that in foreign; (3) should the two economies undergo financial liberalization, the capital will be flowing from home to foreign; (4) if one of the sectors is non-tradable, the capital inflows push up the wages in foreign, leading to further losses of competitiveness and to current account overshooting. In the third chapter, I calibrate the quantitative version of the model developed in Chapter 2 to eight European economies on the eve of the Global Financial Crisis. 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First, for each country, I break down the time series of manufacturing value added share into a secular trend and a trade-induced deviation from the trend. I show that national differences are in large part due to trade. Second, I investigate changes in sectoral productivity, trade costs and trade deficits as the driving forces behind the patterns in the data. To do this I build a multi-sector Eaton and Kortum (2002) model and simulate the effects of different shocks on the manufacturing value added shares in the sample. While calibrating the model, I develop a novel method of identifying trade cost- and productivity shocks, which makes use of symmetry restrictions on sectoral trade cost shocks. I calibrate the model at a two-digit level of disaggregation, which permits me to study not only the changes in the manufacturing share, but also its composition at a sub-sectoral level. I find that open economy forces are responsible for 32% of the observed change in the manufacturing shares in my sample, and for 39% if the composition of the manufacturing sector is taken into account. Focusing on individual shocks, I show that for the aggregate manufacturing share, trade cost- and aggregate trade deficit shocks played the biggest role, whereas the productivity shocks mattered more in driving the composition of manufacturing. In the second chapter, I study financial liberalization between economies that differ in their overall competitiveness. I first show that if firms compete oligopolistically, then competitiveness --- relatively low aggregate unit costs of production --- is a feature of an economy with a fatter tailed productivity distribution and relatively more very large --- `superstar’ --- firms. Embedding this setup in a two-country model with heterogeneous agents and non-homothetic saving behaviour, I show that if the home is more competitive, then: (1) it enjoys a higher aggregate profit rate than foreign; (2) its autarkic interest rate is lower than that in foreign; (3) should the two economies undergo financial liberalization, the capital will be flowing from home to foreign; (4) if one of the sectors is non-tradable, the capital inflows push up the wages in foreign, leading to further losses of competitiveness and to current account overshooting. In the third chapter, I calibrate the quantitative version of the model developed in Chapter 2 to eight European economies on the eve of the Global Financial Crisis. I show that the competitiveness gap can explain 27% of variation in the current account imbalances incurred in the period. 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