The HMY model: Slides

Features of the HMY ModelMulticountry, multi sector model with heterogeneous rms (a là Melitz (2003)).Firms face a proximity-concentration trade-off.exporting involves higher variable costs and lower xed costs, while FDI involveslower variable and higher xed costsMain features:only the most productive rms engage in foreign activitiesof those rms that serve foreign markets, only the most productive engage in FDIFDI sales relative to exports are larger in sectors with more rm heterogeneitythe magnitude of the impact of the heterogeneity is comparable to the magnitudeof the impact of the proximity-concentration trade-off variablesAlexander Tarasov (University of Munich) The HMY model Summer 2012 3 / 27