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!1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e...

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Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare (http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].
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Page 1: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 2: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 3: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

π

θ

ϕ ϕ

θ θ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 4: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

τ

α

ε

ε

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 5: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

τ ε

∑τ ε

/ ∑

τ ε

∑τ ε

τ

/

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 6: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

ε

τε γ

β λ χ γ

χ λ

γ

/

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 7: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

γ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 8: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

ϕ ϕ ϕ τ σμ ρϕσ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 9: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

ϕ

ϕσ

μ

/ σ/ σ τ

ρ

σ ∑∞

ϕ

ϕσ

ϕ ∑∞

ϕ

τ

ρϕ

σ

ϕ

λ/γ

/ σθ

θγ ∑ τ

γ σ γ / σ∑ λ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 10: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

ϕ λϕθτ

σ σ /γϕ ϕ

λ

σ

ϕϕ ϕ μ

τ

θ

γγ/ σ

˜ μτ

θ

σ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 11: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

τ / τγ σ

σ/

στ γ

σ

σ γ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 12: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 13: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

α α α α

ϕϕ

ϕβ β

β β

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 14: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

β β

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 15: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 16: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Ω

αΩ

γΩ

ηΩ

γ γγ

α ηα η

γα η

Ω

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 17: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

¯α η

μ

γ

πγ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 18: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

/

γφ

φ

γ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 19: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 20: !1/@A>1 :@>-5:0A?@>E 1@1>;31:15@E5:(>-01;018? %->@ · !1/@a>1 :@>-5:0a?@>e 1@1>;31:15@e5:(>-01";018? %->@ :@1>:-@5;:-8 /;:;95/? %;8 :@>n?

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].


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