Associate Professor Jie Cai has her paper published in American Economic Journal: Microeconomics, a first-tier journal as listed by SUFE. The paper entitled “Knowledge Diffusion, Trade, and Innovation across Countries and Sectors” was co-authored with Dr. Nan Li, Economist of the International Monetary Fund, and Dr. Ana Maria Santacreu, Economist of St. Louis Division of American Federal Reserve System.
This paper provides a unified framework for quantifying the cross-country and cross-sector interactions among trade, innovation, and knowledge diffusion. This framework is used to study the effect of trade liberalization in an endogenous growth model in which comparative advantage and the stock of knowledge are determined by innovation and diffusion. The model is calibrated to match observed cross-country and cross-sector heterogeneity in production, innovation efficiency, and knowledge spillovers. The counterfactual analysis shows that a reduction in trade costs induces a Real location of R&D and comparative advantage across sectors. Heterogeneous knowledge diffusion amplifies the specialization effects of trade-induced R&D reallocation, becoming an important source of welfare. (JEL F12, F14, O33, O34, O41)
Associate Professor Jie Cai joined the SOE in 2015. She holds a PhD in economics from University of British Columbia and her primary area of research is innovation and economic growth, international economics, firm dynamics, and network theory.