The Empirics of General Equilibrium Trade Theory: What Have We Learned?

Bernhofen, Daniel M.

doi:10.2139/ssrn.1705342

Cited by 1 publication

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References 83 publications

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“…To appreciate the dichotomy between the absence of significant trade effects in growth regressions and the number of theories that relate trade to growth, we briefly summarize the trade and growth effects and their associated candidate regressors that have been suggested by various strands of trade theories. Neoclassical trade theories focus on static comparative advantage (productivity and endowment differences) and aggregate trade volumes (e.g., Bernhofen ). In order to control for this channel, we include in our empirical model the standard trade volume measure (“Openness”), which we filter for population and country size as in Barro () and Durlauf et al.…”

Section: Trade Export Diversity and Growth Determinantsmentioning

confidence: 99%

The elusive effects of trade on growth: Export diversity and economic take‐off

Eicher

Kuenzel

2016

Canadian J of Economics

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The hallmark of the voluminous growth determinants literature is the absence of a clear‐cut effect of trade on growth. Numerous candidate regressors have been motivated by alternative theories and tested by a multitude of empirical studies, but not one trade regressor has been robustly related to growth. In this paper, we leverage Melitz's (2003) insights regarding sectoral export dynamics and Feenstra and Kee's (2008) approach to productivity and sectoral export diversity to propose a structured approach to trade and growth determinants. Instead of relying on aggregate trade measures as previous studies have done, we examine the diversity of sectoral exports and the development of broad‐based comparative advantage as a potential growth determinant. Controlling for model uncertainty and endogeneity, we find that export diversity serves as a crucial growth determinant for low‐income countries, an effect that weakens with the level of development.

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Section: Trade Export Diversity and Growth Determinantsmentioning

confidence: 99%