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The dynamics of economic integration : theory and policy

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Author Info
Lucas Bretschger () (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
Thomas M. Steger () (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))

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Abstract

Integration a.ects economic growth mainly through two different channels : The scale-effect channel and the factor-reallocation channel. In order to investigate both channels within a unifying framework, we employ a simple descriptive growth model. The scale-effect channel increases either the long-run growth rate or the level of the balanced growth path. The factor-reallocation channel is ambiguous. It is shown under which conditions this mechanism induces either a rise or a fall in the long-run growth rate. In addition, a number of policy conclusions are drawn.

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Publisher Info
Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series Economics working paper series with number 04/32.

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Length: 23 pages
Date of creation: Apr 2004
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Handle: RePEc:eth:wpswif:04-32

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Related research
Keywords: trade; economic integration; economic growth; scale e.ects; factor reallocation;

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Find related papers by JEL classification:
F1 - International Economics - - Trade
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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