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Cross-Country Heterogeneity and the Trade-Income Relationship

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  • Herzer, Dierk

Abstract

We examine the relationship between trade and income using heterogeneous panel cointegration techniques to account for the potential cross-country heterogeneity in the effects of trade. Our main results are: (i) trade has, on average, a statistically significant, but relatively small positive effect on income, (ii) there is considerable heterogeneity in the effects of trade on income across countries, and (iii) the effect of trade on income tends to be greater in countries with higher levels of education, with a lower share of primary commodities in total exports, less business and labor market regulations, higher institutional quality, and higher development levels.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 44 (2013)
Issue (Month): C ()
Pages: 194-211

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Handle: RePEc:eee:wdevel:v:44:y:2013:i:c:p:194-211

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: trade; income; cross-country heterogeneity; panel cointegration; general-to-specific approach;

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Cited by:
  1. Herzer, Dierk & Strulik, Holger, 2013. "Religiosity and income: A panel cointegration and causality analysis," Center for European, Governance and Economic Development Research Discussion Papers 168, University of Goettingen, Department of Economics.
  2. Krenz, Astrid, 2013. "Political institutions and trade-evidence for the long-run relationship and causality," Center for European, Governance and Economic Development Research Discussion Papers 182, University of Goettingen, Department of Economics.
  3. Hafner, Kurt A. & Mayer-Foulkes, David, 2013. "Fertility, economic growth, and human development causal determinants of the developed lifestyle," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 107-120.

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