IMF Staff Papers

IMF Staff Papers, Volume 56, No. 3

July 31, 2009

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International Monetary Fund. Research Dept. "IMF Staff Papers, Volume 56, No. 3", IMF Staff Papers 2009, 003 (2009), accessed November 9, 2025, https://doi.org/10.5089/9781589068209.024

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Summary

Studies of the impact of trade openness on growth are based either on crosscountry analysis—which lacks transparency—or case studies—which lack statistical rigor. This paper applies a transparent econometric method drawn from the treatment evaluation literature (matching estimators) to make the comparison between treated (that is, open) and control (that is, closed) countries explicit while remaining within a statistical framework. Matching estimators highlight that common cross-country evidence is based on rather far-fetched country comparisons, which stem from the lack of common support of treated and control countries in the covariate space. The paper therefore advocates paying more attention to appropriate sample restriction in crosscountry macro research.

Subject: Balance of payments, Capital flows, Consumption, Current account, Current account deficits, Emerging and frontier financial markets, Financial markets, National accounts

Keywords: Africa, Asia and Pacific, Asset-price shock, Capital flows, Caribbean, Consumption, Consumption growth, Current account, Current account deficits, Current account position, Current account sustainability, Emerging and frontier financial markets, Global, Middle East, Net capital flow, SP

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