International Trade and Investment.

• Position: Bureau News

Members and guests of the Program on International Trade arid Investment met at the Bureau's California office on December 7-8. Program Director Robert C. Feenstra of NBER and University of California, Davis, organized the meeting. These papers were discussed:

Donald R. Davis and David Weinstein, NBER and Columbia University, "Bones, Bombs, and Break Points: The Geography of Economic Activity" (NBER Working Paper No. 8517)

Carolyn L. Evans and James Harrigan, Federal Research Bank of New York, "Distance, Time, and Specialization".

James E. Rauch, NBER and University of California at San Diego, and Joel Watson, University of California at San Diego, "Entrepreneurship in International Trade"

Bruce Blonigen, NBER and University of Oregon, and Jee-Hyeong Park, Wayne State University, "Dynamic Pricing in the Presence of Anti-Dumping Policy: Theory and Evidence"

Eric Edmonds, Dartmouth College, and Nina Pavcnik, NBER and Dartmouth College, "Does Globalization Increase Child Labor?"

Jonathan Eaton and Sam Kortum, NBER and Boston University, and Francis Kramarz, CREST-INSEE, "An Anatomy of International Trade: Evidence from French Films"

Thomas J. Prusa, NBER and Rutgers University, "Survival of the Largest: Examining and Duration of U.S. Import Suppliers"

Peter Debaere and Hongshik Lee, University of Texas at Austin, "Does International Trade Theory Explain a Country's Terms of Trade?"

Davis and Weinstein consider the distribution of economic activity within a country in light of three leading theories: increasing returns, random growth, and locational fundamentals. They examine the distribution of regional population in Japan from the Stone Age to the modern era, and consider the Allied bombing of Japanese cities in WWII as a shock to relative city sizes. Their results support a hybrid theory in which locational fundamentals establish the spatial pattern of relative regional densities, but increasing returns may help to determine the degree of spatial differentiation. One implication of these results is that even large temporary shocks to urban areas have no long-run impact on city size.

Evans and Harrigan argue that the interaction of time, technology, and distance can make distance matter more, not less, in equilibrium. They use a unique dataset which includes product-level information from a major U.S. retailer, detailed bilateral trade policy measures, and international trade flows in apparel to confirm the predictions of the model. In their...