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Learning the Wealth of Nations

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  • Francisco J. Buera
  • Alexander Monge‐Naranjo
  • Giorgio E. Primiceri

Abstract

We study the evolution of trade policies over time and across countries. We consider a model in which own and neighbors' past experiences influence policy choices, through their effect on policymakers' beliefs. We estimate the model using a large panel of countries. We find that there is a strong geographical component to learning, which is crucial to explain the slow adoption of liberal policies during the post-war period. Our model also predicts that there would be a substantial reversal to protectionism if nowadays the world was hit by a shock of the size of the Great Depression.
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Suggested Citation

  • Francisco J. Buera & Alexander Monge‐Naranjo & Giorgio E. Primiceri, 2011. "Learning the Wealth of Nations," Econometrica, Econometric Society, vol. 79(1), pages 1-45, January.
    • Handle: RePEc:ecm:emetrp:v:79:y:2011:i:1:p:1-45
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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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