Free Trade, Growth, and Convergence / Dan Ben-David, Michael B. Loewy.

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Ben-David, Dan

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w6095.Publication details: Cambridge, Mass. National Bureau of Economic Research 1997.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: What is the impact on output of movement towards free trade? Can trade liberalization have a permanent effect on output levels, and more importantly, does it have an impact on steady-state growth rates? The model developed here emphasizes the role" that knowledge spillovers emanating from heightened trade can have in income convergence and growth rates over the long run. The model also facilitates an analysis of the dynamic behavior of income levels and terms of trade as well as growth rates during the transition between steady states. Among the results of the model, unilateral liberalization by one country induces a level effect on the liberalizing country that reduces the income gap between it and other wealthier countries. In some cases, the liberalizing country may even leapfrog over initially wealthier countries. From the long-run growth perspective, unilateral (and multilateral) liberalization generates a positive impact on the steady-state growth of all the trading countries.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w6095 (Browse shelf(Opens below))	Not For Loan

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July 1997.

What is the impact on output of movement towards free trade? Can trade liberalization have a permanent effect on output levels, and more importantly, does it have an impact on steady-state growth rates? The model developed here emphasizes the role" that knowledge spillovers emanating from heightened trade can have in income convergence and growth rates over the long run. The model also facilitates an analysis of the dynamic behavior of income levels and terms of trade as well as growth rates during the transition between steady states. Among the results of the model, unilateral liberalization by one country induces a level effect on the liberalizing country that reduces the income gap between it and other wealthier countries. In some cases, the liberalizing country may even leapfrog over initially wealthier countries. From the long-run growth perspective, unilateral (and multilateral) liberalization generates a positive impact on the steady-state growth of all the trading countries.