Projekt

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Economic Inequality and International Trade

Titel Englisch Economic Inequality and International Trade
Gesuchsteller/in Zweimueller Josef
Nummer 132272
Förderungsinstrument Sinergia
Forschungseinrichtung Institut für Empirische Wirtschaftsforschung Universität Zürich
Hochschule Universität Zürich - ZH
Hauptdisziplin Volkswirtschaftslehre
Beginn/Ende 01.01.2012 - 30.04.2015
Bewilligter Betrag 970'539.00
Alle Daten anzeigen

Keywords (14)

International Trade, Nonhomothetic Preferences, Inequality, Income distribution, Product quality, Monopolistic competition, Asymmetric Markups, Gravity equation, Growth, Intra-industry trade, Parallel imports, Structural change, Regional trade agreements, Capital market imperfections

Lay Summary (Englisch)

Lead
Lay summary
In recent decades, the world has seen dramatic changes in economic
inequalities, both within and between countries. Several population-rich
countries have experienced unprecedented economic growth and hitherto
unknown prosperity for sizeable parts of their populations. In China, India,
Brazil, and other countries large middle classes have been emerging,
creating huge new consumer markets with a high export potential for the rest
of the world. Dramatic increases in inequality have also taken place within
industrialized countries, with more polarized income distributions and
eroding middle classes, particularly in the U.S. but also in other rich
economies. These trends have generated dramatic changes in the global
distribution of purchasing power, both within and across countries.

This project will study the implications of these large and changing
economic inequalities for the pattern and volume of international trade. The
basic approach of our project aims to extend the existing literature in two
ways. First, our focus is on the distribution of economic resources among world citizens. This is different from the majority of the existing
literature that emphasizes the distribution of economic resources across nations and abstracts from within-country inequality. How do the new
and growing middle classes in emerging markets affect the pattern of
international trade? How will rising inequalities within rich countries
affect trade structures and trade volumes? How will trade liberalizations
affect the poor and the middle classes in the developing and the developed
world? Our approach allows investigating such potentially important issues
that cannot be (easily) addressed within the standard frameworks in
international economics and macroeconomics. Second, on a more general basis,
we explore economic inequality as a potentially important determinant of
trade outcomes. This focus is quite different from a long tradition in
international economics that has been exploring the opposite chain of
causality: the impact of international trade on factor prices and the
resulting inequality in the distribution of income among households within
countries or among representative factor owners across countries.

Our project is both theoretically and empirically oriented. On the theoretical side, we aim to contribute to and extend the recent theories of
international trade in two ways. The main focus of our theoretical projects
will be to explore the implications of economic inequalities through the
channel of non-homothetic preferences. Our basic framework emphasizes
the extensive margin of consumption choices and builds upon empirically
relevant consumption patterns: rich households consume more types of goods
than poor households. This framework is rich enough to address the
interesting questions mentioned above. Yet it is simple and tractable enough
to cover a broad range of related issues such as trade and growth, the
quality and variety of trade, and international product cycles. A second
contribution of our project explores how income and wealth inequalities
affect trade flows through the channel of imperfect capital markets.
Here our goal is to contribute to the growing literature that explores to
which extent a country's financial development explains its economic
integration. While this literature explores the importance of access to
credit, only very few papers have looked at how this interacts with income
and wealth inequalities.

On the empirical side, we will extend the existing literature by a
strong focus on structural modeling. For decades, the empirical
analysis of the determinants of bilateral or multilateral trade has focused
on reduced-form empirical models, mostly along the lines of the so-called
gravity equation. In our analysis we intend to go beyond this empirical
tradition and take more seriously the opportunities arising from structural
empirical analysis of general equilibrium models of income inequality and
bilateral trade.
Direktlink auf Lay Summary Letzte Aktualisierung: 21.02.2013

Verantw. Gesuchsteller/in und weitere Gesuchstellende

Mitarbeitende

Publikationen

Publikation
Innovation, Trade, and Finance.
Egger Peter, Keuschnigg Christian (2015), Innovation, Trade, and Finance., in American Economic Journal: Microeconomics, 7(2), 121-157.
Trade, Wages, and Profits
Egger Peter, Kreickemeier Udo, Egger Hartmut (2013), Trade, Wages, and Profits, in European Economic Review, 64(11), 332-350.
On Measuring the Welfare Gains from Trade under Consumers Heterogeneity
Nigai Sergey (2016), On Measuring the Welfare Gains from Trade under Consumers Heterogeneity, in The Economic Journal, 126(593), 1193-1237.
Structural Estimation of Gravity Models with Path-Dependent Market Entry
Egger Peter, Pfaffermayr Michael (2014), Structural Estimation of Gravity Models with Path-Dependent Market Entry, Centre for Economic Policy Research, 2011, London.
The Macroeconomics of Model T
Föllmi Reto, Wuergler Tobias, Zweimüller Josef (2014), The Macroeconomics of Model T, in Journal of Economic Theory, 153(0022-0531 ), 617-647.
Does Compulsory Voting Increase Support for Leftist Policy?
Bechtel Michael M., Hangartner Dominik, Schmid Lukas (2016), Does Compulsory Voting Increase Support for Leftist Policy?, in Americal Journal of Political Science, 60(3), 752-767.
Income Distribution in Macroeconomic Models
Bertola Giuseppe, Föllmi Reto, Zweimüller Josef (2014), Income Distribution in Macroeconomic Models, Princeton University Press, Princeton.
Inequality and Growth: The Neglected Time Dimension
Halter Daniel, Oechslin Manuel, Zweimüller Josef (2014), Inequality and Growth: The Neglected Time Dimension, in Journal of Economic Growth, 19(1), 81-104.
Is Inequality Harmful for Innovation and Growth? Price versus Market Size Effects
Föllmi Reto, Zweimüller Josef (2016), Is Inequality Harmful for Innovation and Growth? Price versus Market Size Effects, in Journal of Evolutionary Economics, 26(1), 1-20.

Zusammenarbeit

Gruppe / Person Land
Felder der Zusammenarbeit
University of Bayreuth Deutschland (Europa)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
- Publikation
Swiss National Bank Schweiz (Europa)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
- Forschungsinfrastrukturen
Ifo Institute, International Trade Deutschland (Europa)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
Tilburg University Niederlande (Europa)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
- Publikation
Brown University Vereinigte Staaten von Amerika (Nordamerika)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
Northwestern University Vereinigte Staaten von Amerika (Nordamerika)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
University of Tübingen Deutschland (Europa)
- vertiefter/weiterführender Austausch von Ansätzen, Methoden oder Resultaten
- Publikation

Wissenschaftliche Veranstaltungen

Aktiver Beitrag

Titel Art des Beitrags Titel des Artikels oder Beitrages Datum Ort Beteiligte Personen
FinKT Final Conference: Knowledge transfer and entrepreneurship Vortrag im Rahmen einer Tagung Optimal Patent Strength under Financial Constraints 16.04.2015 Rimini, Italien Kiedaisch Christian
MidWest Trade Vortrag im Rahmen einer Tagung Trade Effects of Income Inequality Within and Between Countries 12.10.2014 Michigan, Vereinigte Staaten von Amerika Rydzek Benedikt
Workshop Aussenwirtschaft SIAW-HSG Vortrag im Rahmen einer Tagung The Brussels Leviathan: Implications for Swiss-based Multinationals 04.10.2014 St. Gallen, Schweiz Föllmi Reto
SNF Sinergia Workshop on The Swiss Conferderation: A Natural Laboratory for Research on Fiscal and Political Decentralization Vortrag im Rahmen einer Tagung Should I Stay or Should I Go? Tax-Induced Mobility and the ETI in Switzerland 19.09.2014 Zürich, Schweiz Martinez Isabel
ETSG European Trade Study Group 2014 Vortrag im Rahmen einer Tagung Capital Taxation, Investment, Growth, and Welfare 11.09.2014 München, Deutschland Rydzek Benedikt
Meeting of the European Economic Association Vortrag im Rahmen einer Tagung Trade Liberalization and Credit Constraints: Reallocations at the Firm Level 26.08.2014 Toulouse, Frankreich Legge Stefan
70th Annual Congress of the International Institute of Public Finance IIPF Vortrag im Rahmen einer Tagung Capital Taxation, Investment, Growth, and Welfare 20.08.2014 Lugano, Schweiz Rydzek Benedikt
Warsaw International Economic Meeting Vortrag im Rahmen einer Tagung Should I Stay or Should I Go? Tax-Induced Mobility and the ETI in Switzerland 11.07.2014 Warschau, Polen Martinez Isabel
Warsaw International Economic Meeting Vortrag im Rahmen einer Tagung Trade Liberalization and Credit Constraints: Reallocations at the Firm Level 10.07.2014 Warschau, Polen Legge Stefan
CEPR/Sinergia Conference on Inequeality, Labor Markets and Trade Einzelvortrag Arbitrage, Transaction Costs, and International Trade Flows 17.06.2014 Ascona, Schweiz Föllmi Reto
SNF Sinergia CEPR Conference 2014 Poster On Measuring the Welfare Gains from Trade under Consumers Heterogeneity 17.06.2014 Ascona, Schweiz Nigai Sergey
CEPR/Sinergia Conference Vortrag im Rahmen einer Tagung Trade Liberalization and Credit Constraints: Reallocations at the Firm Level 16.06.2014 Ascona, Schweiz Legge Stefan
SNF Sinergia - CEPR Conference on Economic Inequality, Labor Markets and International Trade (ILMIT) Vortrag im Rahmen einer Tagung The Effect of Inequality on International Patent Applications 15.06.2014 Ascona, Schweiz Kiedaisch Christian
Jahrestagung des Ausschuss für Aussenwirtschaftstheorie und Aussenpolitik des Vereins für Socialpolitik Vortrag im Rahmen einer Tagung Globalization and Productivity in the Developing World 30.05.2014 Augsburg, Deutschland Föllmi Reto
Annual Meeting Swiss Society for Economics and Statistics Vortrag im Rahmen einer Tagung Trade Liberalization and Credit Constraints: Reallocations at the Firm Level 25.04.2014 Bern, Schweiz Föllmi Reto
Research Seminar, University of Louvain Einzelvortrag The threat of parallel imports and the extensive margin of international trade 15.04.2014 Louvain, Belgien Föllmi Reto
Research Seminar, Swiss National Bank Einzelvortrag Arbitrage, Transaction Costs, and International Trade Flows 14.02.2014 Bern, Schweiz Föllmi Reto
Public Seminar at Faculty of Social Sciences Vortrag im Rahmen einer Tagung Trade, Wages and Profits 16.12.2013 Charles University, Prague, Tschechische Republik Egger Peter
UNCTAD Workshop on "Challenges in International Trade and Trade Policy in the Context of Post-2015 Development Goals" Vortrag im Rahmen einer Tagung Globalization and Productivity in the Developing World 09.12.2013 Genf, Schweiz Föllmi Reto
UNCTAD Workshop Vortrag im Rahmen einer Tagung Trade, Wages and Profits 09.12.2013 Genf, Schweiz Egger Peter
Research Seminar at University of Glasgow Vortrag im Rahmen einer Tagung Trade, Wages and Profits 21.11.2013 University of Glasgow, Grossbritannien und Nordirland Egger Peter
Research Seminar, DIW Berlin Vortrag im Rahmen einer Tagung Globalization and Productivity in the Developing World 06.11.2013 Berlin, Deutschland Föllmi Reto
Sinergia Workshop on Economic Inequality and International Trade Vortrag im Rahmen einer Tagung Arbitrage and Trade Flows 24.10.2013 Diessenhofen, Schweiz Föllmi Reto
Sinergia Workshop on Economic Inequality and International Trade Vortrag im Rahmen einer Tagung The Effects of Labor and Income Taxes and Trade and Welfare 24.10.2013 Diessenhofen, Schweiz Nigai Sergey
Sinergia Workshop on Economic Inequality and International Trade Vortrag im Rahmen einer Tagung The Effect of Inequality on International Patent Flows 24.10.2013 Diessenhofen, Schweiz Kiedaisch Christian
Sinergia Workshop on Economic Inequality and International Trade Poster Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2008 24.10.2013 Diessenhofen, Schweiz Martinez Isabel
Sinergia Workshop on Economic Inequality and International Trade Poster Trade effects of within and between country inequality 24.10.2013 Diessenhofen, Schweiz Rydzek Benedikt
Research Seminar, University of Lucerne Vortrag im Rahmen einer Tagung Globalization and Productivity in the Developing World 23.10.2013 Luzern, Schweiz Föllmi Reto
Research Seminar, University of Cagliari Vortrag im Rahmen einer Tagung Globalization and Productivity in the Developing World 11.10.2013 Cagliari, Italien Föllmi Reto
Midwest Economic Theory and Internartional Trade Meeting Vortrag im Rahmen einer Tagung Trade effects of within and between country inequality 11.10.2013 Ann Arbor, Vereinigte Staaten von Amerika Rydzek Benedikt
Workshop at Universidad Jaume I (UJI), Castellón (SPAIN) Vortrag im Rahmen einer Tagung Trade, Wages and Profits 27.09.2013 Universidad Jaume I (UJI), Spanien Egger Peter
European Trade Study Group Vortrag im Rahmen einer Tagung Trade effects of within and between country inequality 12.09.2013 Birmingham, Grossbritannien und Nordirland Rydzek Benedikt
ETSG European Trade Study Group 2013 Birmingham Vortrag im Rahmen einer Tagung Trade Effects of Income Inequality Within and Between Countries 11.09.2013 Birmingham, Grossbritannien und Nordirland Rydzek Benedikt
Conference on Power and Justice in the World-System Vortrag im Rahmen einer Tagung Increasing Top Income Shares in Switzerland, Europe and the U.S. 09.08.2013 New York, Vereinigte Staaten von Amerika Martinez Isabel
Barcelona GSE Summer School on Labor Economics Vortrag im Rahmen einer Tagung Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2008 08.07.2013 Barcelona, Spanien Martinez Isabel
XIV Conference on International Economics Vortrag im Rahmen einer Tagung Trade effects of within and between country inequality 27.06.2013 Palma de Mallorca, Spanien Rydzek Benedikt
XIV Conference on International Economics Vortrag im Rahmen einer Tagung Capital Taxation, Investment, Growth, and Welfare 27.06.2013 Palma de Mallorca, Spanien Rydzek Benedikt
Congress of the Swiss Sociological Society Vortrag im Rahmen einer Tagung Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2008 26.06.2013 Bern, Schweiz Martinez Isabel
Annual Meeting Swiss Society of Economics and Statistics Vortrag im Rahmen einer Tagung Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2008 20.06.2013 Neuchâtel, Schweiz Martinez Isabel
Research Seminar, Université de Paris Dauphine Vortrag im Rahmen einer Tagung Non-homothetic preferences, parallel imports and the extensive margin of international trade 18.06.2013 Paris, Frankreich Föllmi Reto
SNF Sinergia - CEPR Conference on: Economic Inequality, Labor Markets and International Trade Vortrag im Rahmen einer Tagung Trade Effects of Income Inequality Within and Between Countries 16.06.2013 Ascona, Schweiz Rydzek Benedikt
ISEO Summer School Vortrag im Rahmen einer Tagung Trade Effects of Income Inequality Within and Between Countries 15.06.2013 Iseo, Italien Rydzek Benedikt
The Financial Crisis, Integration and Contagion (INFINITI) Poster Selective International Financial Integration 10.06.2013 London, Grossbritannien und Nordirland Tarlea Filip
CAGE International Trade Research Day Vortrag im Rahmen einer Tagung Trade, Wages and Profits 22.05.2013 University of Warwick, Grossbritannien und Nordirland Egger Peter
CESifo Area Conference on Global Economy Vortrag im Rahmen einer Tagung On Measuring the Welfare Gains from Trade under Consumer Heterogeneity 17.05.2013 München, Deutschland Nigai Sergey
CESifo Area Conference on Global Economy 2013 Vortrag im Rahmen einer Tagung On Measuring the Welfare Gains from Trade under Consumers Heterogeneity 17.05.2013 München, Deutschland Nigai Sergey
Conference “Globalization and Labor Market Outcomes : Recent Advances", Banque de France Vortrag im Rahmen einer Tagung Trade, wages, and profits 16.05.2013 Paris, Frankreich Egger Peter
Annual Meeting of the Austrian Economic Association Vortrag im Rahmen einer Tagung Trade, Wages and Profits 10.05.2013 University of Innsbruck, Oesterreich Egger Peter
Royal Economic Society Conference 2012 Vortrag im Rahmen einer Tagung On Measuring the Welfare Gains from Trade under Consumer Heterogeneity 03.04.2013 Royal Holloway, Grossbritannien und Nordirland Nigai Sergey
WWWforEurope Conference on Modelling Growth and Socio-ecological Transition Vortrag im Rahmen einer Tagung Inequality, Environmental Taxation, and Green Innovations 12.03.2013 Wien, Oesterreich Kiedaisch Christian
Trade Seminar, Universität Salzburg Vortrag im Rahmen einer Tagung Trade, Wages and Profit 12.03.2013 Salzburg, Oesterreich Egger Peter
Presentation at CREST Vortrag im Rahmen einer Tagung The Macroeconomics of Model T 02.03.2013 Paris, Frankreich Zweimueller Josef
6th FIW-Research Conference „International Economics“ Vortrag im Rahmen einer Tagung On Measuring the Welfare Gains from Trade under Consumers Heterogeneity 22.02.2013 Wien, Oesterreich Nigai Sergey
6th FIW Research Conference "International Economics" Vortrag im Rahmen einer Tagung On Measuring the Welfare Gains from Trade under Consumer Heterogeneity 22.02.2013 Vienna, Oesterreich Nigai Sergey
5th Villars Research Workshop on International Trade Vortrag im Rahmen einer Tagung On Measuring the Welfare Gains from Trade under Consumer Heterogeneity 06.02.2013 Villars-Sur-Ollo, Schweiz Nigai Sergey
4th Sao Paulo School of Economics Conference Series Vortrag im Rahmen einer Tagung The Macroeconomics of Model T 10.12.2012 Sao Paulo, Brasilien Zweimueller Josef
EIIT Empirical Investigations in International Trade Conference Vortrag im Rahmen einer Tagung Trade, Wages and Profits 02.11.2012 Santa Cruz, CA 95064, Vereinigte Staaten von Amerika Egger Peter
XIII Conference on International Economics Vortrag im Rahmen einer Tagung The Effects of Trade and Endogenous Technological Change on the College Wage Gap and Unemployment 20.06.2012 Granada, Spanien Rydzek Benedikt
CESifo Area Conference on Global Economy 2012 Vortrag im Rahmen einer Tagung The Effects of Trade and Endogenous Technological Change on the College Wage Gap and Unemployment 25.05.2012 München, Deutschland Rydzek Benedikt
Seminar talk at the Université de Nantes Vortrag im Rahmen einer Tagung Trade, Wages and Profits 04.04.2012 Nantes, Frankreich Egger Peter


Selber organisiert

Titel Datum Ort
Ph.D. Seminar in Macroeconomics and Labor Markets HS14 02.10.2014 Zürich, Schweiz
Symmetry-Breaking: An Alternative Approach to Understand Economic Variations Across Space and Time 24.06.2014 Zürich, Schweiz
SNF Sinergia - CEPR Conference on Economic Inequality, Labor Markets and International Trade (ILMIT) 15.06.2014 Ascona, Schweiz
Ph.D. Seminar in Macroeconomics and Labor Markets FS14 03.04.2014 Zürich, Schweiz
Sinergia Workshop 2013 - Economic Inequality and International Trade 24.10.2013 Diessenhofen, Schweiz
Ph.D. Seminar in Macroeconomics and Labor Markets HS13 26.09.2013 Zürich, Schweiz
Simulation Techniques for Applied Microeconomics (Ph.D Kurs an der ETHZ) 23.06.2013 Zürich, Schweiz
Seminar on Growth and Development 13.05.2013 St. Gallen, Schweiz
Ph.D. Seminar in Macroeconomics and Labor Markets FS13 14.03.2013 Zürich, Schweiz
Unified Growth Theory and Comparative Economic Development 03.12.2012 St. Gallen, Schweiz
Seminar on International Economic Policy 22.11.2012 Zürich, Schweiz
Sinergia Workshop 2012 11.10.2012 Hurden, Schweiz
Ph.D. Seminar in Macroeconomics and Labor Markets HS12 27.09.2012 Zürich, Schweiz
Ph.D. Seminar in Macroeconomics and Labor Markets FS12 15.03.2012 Zürich, Schweiz

Veranstaltungen zum Wissenstransfer

Aktiver Beitrag

Titel Art des Beitrags Titel des Artikels oder Beitrages Datum Ort Beteiligte Personen
UNCTAD Workshop on "Challenges in International Trade and Trade Policy in the Context of Post-2015 Development Goals" Vortrag 09.12.2013 Genf, Schweiz


Kommunikation mit der Öffentlichkeit

Kommunikation Titel Medien Ort Jahr
Print (Buch, Brochuren, Infoblätter) Steigende Bildungsanforderungen an den Mittelstand, in: Avenir Suisse, Der strapazierte Mittelstand Deutschschweiz 2012
Print (Buch, Brochuren, Infoblätter) Entwicklungen auf dem Arbeitsmarkt und Folgen für das Lohngefüge, in: Avenir Suisse (ed.) Deutschschweiz 2012

Auszeichnungen

Titel Jahr
Best Paper Prize, Warsaw International Economic Meeting, 2013 2013
Distinguished CESifo Affiliate Award (2013), CESifo Area Conference on Global Economy 2013
Young Economist Award 2013, 6th FIW Research Conference ‘International Economics’ 2013

Verbundene Projekte

Nummer Titel Start Förderungsinstrument
155369 Inequality and Growth in an Aging Population: The Role of Product Demand Shifts 01.09.2014 Doc.Mobility
143399 Ungleichheit der Einkommen und Vermögen in der Schweiz von 1970 bis 2010 01.02.2013 Projektförderung (Abt. I-III)
158823 Tax-Induced Mobility and the Taxable Income Elasticity in Switzerland 01.01.2015 Doc.Mobility
155804 Trade, Innovation and Labor Markets 01.02.2015 SNSF Starting Grants
154446 Inequality and Globalization: Demand versus Supply Forces and Local Outcomes 01.05.2015 Sinergia

Abstract

In recent decades, the world has seen dramatic changes in economic inequalities, both within and between countries. Several population-rich countries have experienced unprecedented economic growth and hitherto unknown prosperity for sizeable parts of their populations. In China, India, Brazil, and other countries large middle classes have been emerging, creating huge new consumer markets with a high export potential for the rest of the world. Dramatic increases in inequality have also taken place within industrialized countries, with more polarized income distributions and eroding middle classes, particularly in the U.S. but also in other rich economies. These trends have generated dramatic changes in the distribution of purchasing power both within and across countries around the globe. This project will study the implications of these large and changing economic inequalities for the pattern and volume of international trade. The basic approach of our project aims to extend the existing literature in two ways. First, our focus is on the distribution of economic resources among world citizens. This is different from the majority of the existing literature that emphasizes the distribution of economic resources across nations and abstracts from within-country inequality. How do the new and growing middle classes in emerging markets affect the pattern of international trade? How will rising inequalities within rich countries affect trade structures and trade volumes? How will trade liberalizations affect the poor and the middle classes in the developing and the developed world? Our approach allows investigating such potentially important issues that cannot be (easily) addressed within the standard frameworks in international economics and macroeconomics. Second, on a more general basis, we explore economic inequality as a potentially important determinant of trade outcomes. This focus is quite different from a long tradition in international economics that has been exploring the opposite chain of causality: the impact of international trade on factor prices and the distribution of income across factors of production within countries or across representative factor owners across countries. Our project is both theoretically and empirically oriented. On the theoretical side, we aim to contribute to and extend the recent theories of international trade in two ways. First, the main focus of our theoretical projects will be to explore the implications of economic inequalities through the channel of non-homothetic preferences. Our basic framework emphasizes the extensive margin of consumption choices and builds upon empirically relevant consumption patterns: rich households consume more types of goods than poor households. This framework is rich enough to address the interesting questions mentioned above. Yet it is simple and tractable enough to cover a broad range of related issues such as trade and growth, the quality and variety of trade, and international product cycles. A second contribution of our project explores how income and wealth inequalities affect trade flows through the channel ofimperfect capital markets. Here our goal is to contribute to the growing literature that explores to which extent a country's financial development explains its economic integration. While this literature explores the importance of access to credit, only very few papers have looked at how this interacts with income and wealth inequalities. On the empirical side, we will extend the existing literature by a strong focus on structural modeling. For decades, the empirical analysis of the determinants of bilateral or multilateral trade has focused on reduced-form empirical models, mostly along the lines of the so-called gravity equation. In our analysis we intend to go beyond this empirical tradition and take more seriously the opportunities arising from structural empirical analysis of general equilibrium models of income inequality and bilateral trade.