The Long-Run Effects of Tradeon Income and Income Growth

February 1, 2003

Preview Citation

Format: Chicago

Allan D. Brunner The Long-Run Effects of Tradeon Income and Income Growth, (USA: International Monetary Fund, 2003) accessed November 21, 2024

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

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.

Subject: Agroindustries, Econometric analysis, Economic sectors, Estimation techniques, International trade, National accounts, Personal income, Plurilateral trade, Trade liberalization

Keywords: Africa, Agroindustries, Constructed trade instrument, Economic development, Economic growth, Effects of trade, Estimation techniques, Global, Income growth, Instrument specification, North America, Panel data model, Personal income, Plurilateral trade, Trade liberalization, Trade openness, Trade share, Trade-output relationship, WP

Publication Details

Pages:

39
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2003/037
Stock No:

WPIEA0372003
ISBN:

9781451845594
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers