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The effects of autocatalytic trade cycles on economic growth

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Author Info

  • Jurriën J. Bakker

    ()
    (Eindhoven University of Technology)

  • Oscar Afonso

    ()
    (University of Porto, Faculty of Economics, CEFUP)

  • Sandra T. Silva

    ()
    (University of Porto, Faculty of Economics, CEFUP)

Abstract

In the first part of this paper the effects of trade cycles on economic growth are discussed to test the hypothesis of autocatalytic trade cycles, which indicates that more innovation is produced in countries that are a part of these cycles. Using United Nations data, a trade network is constructed and from this network, a set of variables that represent the participation of countries in trade cycles are constructed. A clear relation between these variables and economic growth is found. However, this relationship changes for different trade cycle sizes, categories of goods and time scales. Trade cycles also have a positive effect for the trade flows involved, although this effect differ significantly depending on the size of the trade cycle. The second part of the paper shows that the effects of trade cycles can be translated into policy recommendations. These conclusions strenghten existing literature but also add new insights to innovation policy and the pursuit of economic prosperity.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 451.

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Length: 26 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:por:fepwps:451

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Related research

Keywords: innovation; autocatalytic trade cycles; international trade; policy;

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Cited by:
  1. Pedro Cosme Costa Vieira, 2012. "A low cost supercritical Nuclear + Coal 3.0 Gwe power plant," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 461, Universidade do Porto, Faculdade de Economia do Porto.
  2. Ricardo Biscaia & Paula Sarmento, 2012. "Cost inefficiency and Optimal Market Structure in Spatial Cournot Discrimination," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 462, Universidade do Porto, Faculdade de Economia do Porto.

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