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Trade and Growth: An Empirical Investigation

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  • Jeffrey A. Frankel
  • David Romer

Abstract

Countries' geographic characteristics have important effects on their trade, and are plausibly uncorrelated with other determinants of their incomes. This paper therefore constructs measures of the geographic component of countries' trade and uses those measures to obtain instrumental variables estimates of the effect of trade on income. The results suggest that ordinary least squares estimates understate the effects of trade, and that trade has a quantitatively large, significant, and robust positive effect on income.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5476.

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Date of creation: Mar 1996
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Publication status: published as American Economic Review, Vol. 89, no. 3 (June 1999): 379-399.(Published under title "Does Trade Cause Growth?")
Handle: RePEc:nbr:nberwo:5476

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