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The Long-Run Effects of Trade on Income and Income Growth
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Author/Editor: |
Brunner, Allan D. |
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February 1, 2003 |
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Electronic Access: |
Free Full Text (PDF file size is 914KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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Summary: This paper examines the dynamic relationship between trade and income. While most economists agree that increased trade leads to an increase in average income, economic theory is ambiguous about the possible effects on the long-run growth rate of the economy. Using a dynamic panel data model, the hypotheses of no long-run effects of trade on income and on income growth are tested explicitly. The possibility of endogeneity is addressed by constructing an instrument for trade by extending Frankel and Romer's (1999) cross-sectional approach to the case of a panel data model. The empirical results indicate that trade has a large and significant effect on the level of income, but the effect on income growth is small and non-robust to model specification.
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Series: |
Working Paper No. 03/37 |
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Subject(s): |
Trade liberalization | Development | Income | Economic growth | Economic models |
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Author's keyword(s): |
Panel data model
| trade liberalization
| economic growth
| economic development
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Published: |
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February 1, 2003 |
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ISBN/ISSN: |
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1934-7073 |
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Format: |
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Paper |
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Stock No: |
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WPIEA0372003 |
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Pages: |
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38 |
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Price: |
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US$15.00
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