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Carl Davidson and Steven J. Matusz, International Trade with Equilibrium Unemployment , Princeton University Press (2010).



New imported inputs, new domestic products New imported inputs, new domestic produc Italo Colantone a,c,d,1, Rosario Crinò b,⁎ a Erasmus University Rotterdam, The Netherlands b CEMFI, Spain twe l da an ew assi mpi llow sets of intermediate products. Finally, new imported inputs give a substantial boost to output growth in manufacturing. owth l cing n ncia an e can s Journal of International Economics 92 (2014) 147–165 Contents lists available at ScienceDirect Journal of Internat j ourna l homepage: www.e and Romer, 1991; Backus et al., 1992). Despite the prominence of these models in the theoretical literature, empirical research on this issue is extremely limited. In an influential paper on India, Goldberg Our results confirm that new imported inputs are a crucial determinant of product creation. More importantly, our analysis shows that new imported inputs work through the interaction of different mechanisms, allowing countries to widen the set of available intermediates and to access superior varieties. Consistent with these results, we also find new imported inputs to be an important stimulus to output growth in manufacturing. Overall, our paper portrays a complete picture of the re- lationship between product creation and access to new foreign inputs. The main point we make is that new imported inputs have a pervasive effect on product creation across countries, work through a complex ☆ The paper has greatly benefited from the comments of two anonymous referees. We are especially grateful to Paolo Epifani for his precious suggestions. We also thank Carlo Altomonte, Pablo Arocena, Tibor Besedeš, Stéphane Bonhomme, Davide Castellani, Klaus Desmet, David Dorn, Jesús Fernández-Huertas Moraga, Gino Gancia, Rodolfo Helg, Amit Khandelwal, Miklós Koren, Claudio Michelacci, Samuele Murtinu, Paolo Naticchioni, Laura Ogliari, Nina Pavcnik, Enrico Pennings, Mark Rob Beveren, Maurizio Zanardi, and seminar participants at ma ments and discussions. Rosario Crinò gratefully acknowle

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