Does Trade Cause Growth?
Examining the correlation between trade and income cannot identify the direction of causation between the two. Countries' geographic characteristics, however, have important effects on trade and are plausibly uncorrelated with other determinants of income. 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 provide no evidence that ordinary least-squares estimates overstate the effects of trade. Further, they suggest that trade has a quantitatively large and robust, though only moderately statistically significant, positive effect on income.
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Volume (Year): 89 (1999)
Issue (Month): 3 (June)
Pages: 379-399
| Handle: | RePEc:aea:aecrev:v:89:y:1999:i:3:p:379-399 |
| Note: | DOI: 10.1257/aer.89.3.379 |
| Contact details of provider: | Web page: https://www.aeaweb.org/aer/ Email: More information through EDIRC
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.
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- Colin I. Bradford Jr. & Naomi Chakwin, 1993. "Alternative Explanations of the Trade-Output Correlation in the East Asian Economies," OECD Development Centre Working Papers 87, OECD Publishing.
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- Edwards, Sebastian, 1993. "Openness, Trade Liberalization, and Growth in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1358-1393, September.
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