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Trade Liberalisation, Economic Crises and Growth

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  • Rod Falvey
  • Neil Foster
  • David Greenaway

Abstract

Many economic reforms are undertaken at a time of economic crisis. But is this a good time to undertake trade reform? In this paper we investigate whether an economic crisis at the time of trade liberalisation affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators commonly used in the literature, to identify the relevant “crisis values” and to estimate the differential post-liberalisation growth effects in the crisis and non-crisis regimes. We find that the post-liberalisation growth depends on the characteristics of the crisis. Broadly speaking, an internal crisis implies lower growth and an external crisis higher growth relative to the non-crisis regime. These effects appear to be present in both the short and longer runs.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 08/14.

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Handle: RePEc:not:notgep:08/14

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Keywords: Trade liberalisation; Growth; Crises;

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Cited by:
  1. Kaplan, Muhittin & Aslan, Alper, 2006. "Türki̇ye’Ni̇n Dişa Açilma Oraninin Ölçümü, 1965-1995," MPRA Paper 10603, University Library of Munich, Germany.
  2. repec:cmj:journl:y:2013:i:29:tuca is not listed on IDEAS
  3. Mariam Camarero & Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmenn D. & Cecilio Tamarit, 2013. "Trade Openness and Income: A Tale of Two Regions," Ibero America Institute for Econ. Research (IAI) Discussion Papers 226, Ibero-America Institute for Economic Research.

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