Trade Development and Political Economy present: Kei-Mu Yi

Trade Development and Political Economy Present: Structural Change in an Open Economy by Kei-Mu Yi

Authors: Timothy Uy, Kei-Mu Yi and Jing Zhang

Speaker: Kei-Mu Yi (Federal Reserve Bank of Minneapolis)

Abstract: The authors study the importance of international trade in structural change. Their framework has both productivity and trade cost shocks, and allows for non-unitary income and substitution elasticities. They calibrate their model to investigate South Korea's structural change between 1971 and 2005. They find that the shock processes, propagated through the model's two main transmission mechanisms, non-homothetic preferences and the open economy, explain virtually all of the evolution of agriculture and services labor shares, and the rising part of the hump-shape in manufacturing. Counterfactual exercises show that the role of the open economy is quantitatively important for explaining South Korea's structural change.

Short Bio: Kei-Mu Yi is senior vice president and director of research for the Federal Reserve Bank of Minneapolis. He was formerly vice president and head of Monetary and Macroeconomic Research at the Federal Reserve Bank of Philadelphia. Kei-Mu’s research focuses on issues relating to international trade, the fragmentation of production, and economic growth and development. His work has been published in top journals such as the American Economic Review, the Journal of Political Economy, the Review of Economics and Statistics etc. He received a Ph.D. in economics from the University of Chicago.