Journal article
TRANSITIONAL GROWTH AND TRADE WITH FRICTIONS: A STRUCTURAL ESTIMATION FRAMEWORK
ECONOMIC JOURNAL, v 130(630), pp 1583-1607
Aug 2020
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We build and estimate a structural model of transitional growth and trade in a many-country world. The gravity model of trade is combined with a capital accumulation mechanism driving transition between steady states. Trade affects growth through changes in consumer and producer prices. Simultaneously, capital accumulation affects trade directly through changes in country size and indirectly through changes in the incidence of trade costs. Theory maps to an econometric system that identifies the parameters of the model and establishes causal links between trade, capital accumulation and income. Counterfactual trade liberalisation magnifies static gains by a dynamic path multiplier of 1.8.
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Details
- Title
- TRANSITIONAL GROWTH AND TRADE WITH FRICTIONS: A STRUCTURAL ESTIMATION FRAMEWORK
- Publication Details
- ECONOMIC JOURNAL, v 130(630), pp 1583-1607
- Publisher
- OXFORD UNIV PRESS; OXFORD
- Number of pages
- 0
- Grant note
- We thank editor Morten Ravn for the excellent handling of our manuscript and for his useful comments and guidance. We also thank the anonymous referees who reviewed our paper and who offered a series of great suggestions. We thank Costas Arkolakis, Scott Baier, Eric Bond, Holger Breinlich, Svetlana Demidova, Klaus Desmet, Jonathan Eaton, Markus Eberhardt, Carsten Eckel, Hartmut Egger, Peter Egger, Giovanni Facchini, Gabriel Felbermayr, Joseph Francois, Gene Grossman, Burkhard Heer, Benedikt Heid, Marten Hillebrand, Richard Hule, Giammario Impullitti, Oleg Itskhoki, Aleksandra Kirilakha, Dalia Marin, Xenia Matschke, Thierry Mayer, Daniel Millimet, Eduardo Morales, Julian Emami Namini, Peter Neary, Douglas Nelson, Dennis Novy, Ezra Oberfield, Thomas Osang, Veronica Rappoport, Stephen Redding, Raymond Riezman, Esteban Rossi-Hansberg, Thomas Sampson, Serge Shikher, Michael Sposi, David Stadelmann, Andrey Stoyanov, Costas Syropoulos, Felix Tintelnot, KlausW < spacing diaeresis > alde, Kei-Mu Yi and participants at the SIRE workshop `Theory and Estimation of Gravity Equations' 2013, Glasgow, the Allied Social Science Associations Annual Meeting 2014, Philadelphia, the Midwest International Economics Group Spring 2014 Meeting, Indianapolis, the SIRE workshop `Country Size and Border Effects in a Globalised World' 2014, Edinburgh, the CESifo workshop `Regional Mega Deals: New Trends, New Models, New Insights' 2014, Venice, the conference `Research on Economic Theory and Econometrics', 2014, Milos, the 29th Annual Congress of the European Economic Association 2014, Toulouse, the 16th Annual Congress of the European Trade Study Group 2014, Munich, the Annual Meeting of the Society for Economic Dynamics 2015, Warsaw, the `Panel Data Workshop on International Trade', University of Amsterdam 2015, the Annual Congress of the Research Committee on International Economics of the German Economic Society 2015, Tubingen, the CESifo Area Conference on Global Economy 2015, Munich, the XX. Conference on Dynamics, Economic Growth, and International Trade 2015, Geneva, and seminars at Drexel University, Temple University, the Centre for Trade and Economic Integration at the Graduate Institute, Geneva, the Economics Research Institute at the Bulgarian Academy of Sciences, the World Trade Organization, Princeton University, Ludwig-Maximilian University in Munich, University of Bayreuth, McMaster University, York University, the US International Trade Commission, University of Trier, University of Salzburg, CEP/LSE, University of Mainz, the Austrian Institute of Economic Research (WIFO), Vienna, and the Vienna University of Economics and Business for valuable comments and suggestions. Mario Larch is grateful for financial support under the Fritz Thyssen Stiftung grant No. Az. 50.14.0.013.
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Drexel University
- Web of Science ID
- WOS:000582320100003
- Scopus ID
- 2-s2.0-85101461300
- Other Identifier
- 991021860771904721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Economics