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Why Has Trade Grown Faster than Income?

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  • Andrew K. Rose

Abstract

Trade of the OECD countries has grown faster than income during the postwar period. This paper tests a number of different hypotheses for the observed growth in the trade/income ratio. For small open economies, increases in real output and international reserves, as well as declines in tariff rates, are associated with growth in the ratio. There are important differences in the behavior of the trade ratio across time and country size.

Suggested Citation

  • Andrew K. Rose, 1991. "Why Has Trade Grown Faster than Income?," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 417-427, May.
  • Handle: RePEc:cje:issued:v:24:y:1991:i:2:p:417-27
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    Cited by:

    1. Suleiman ABU-BADER & Aamer S. ABU-QARN, 2008. "The Impact Of Gatt On International Trade: Evidence From Structural Break Analysis," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(2), pages 23-36.
    2. David L. Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 79-99.
    3. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    4. Céline Carrère & Christopher Grigoriou, 2014. "Can Mirror Data Help To Capture Informal International Trade?," UNCTAD Blue Series Papers 65, United Nations Conference on Trade and Development.
    5. Robert E. Kohn & Paul E. Chambers, 2000. "Pollution Abatement and International Self-Sufficiency," Eastern Economic Journal, Eastern Economic Association, vol. 26(2), pages 213-219, Spring.
    6. Ben-David, Dan & Papell, David H., 1997. "International trade and structural change," Journal of International Economics, Elsevier, vol. 43(3-4), pages 513-523, November.
    7. Benjamin Bridgman, 2008. "Energy Prices and the Expansion of World Trade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 904-916, October.
    8. Liu, Xiaoyun & Xin, Xian, 2011. "Transportation uncertainty and international trade," Transport Policy, Elsevier, vol. 18(1), pages 156-162, January.
    9. Guillaume Daudin & Paola Monperrus-Veroni & Christine Rifflart & Danielle Schweisguth, 2006. "Le commerce extérieur en valeur ajoutée," Revue de l'OFCE, Presses de Sciences-Po, vol. 98(3), pages 129-165.
    10. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    11. Terborgh, Andrew G., 2003. "The post-war rise of world trade: does the Bretton Woods System deserve credit?," Economic History Working Papers 22351, London School of Economics and Political Science, Department of Economic History.
    12. Mihalis Chasomeris, 2009. "On The (Mis)Measurement Of International Transport Costs," South African Journal of Economics, Economic Society of South Africa, vol. 77(1), pages 148-161, March.
    13. Kislaya Prasad, 2012. "Economic Liberalization and Violent Crime," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 925-948.
    14. Andrew K. Rose & Jonathan D. Ostry, 1989. "Tariffs and the macroeconomy: evidence from the USA," International Finance Discussion Papers 365, Board of Governors of the Federal Reserve System (U.S.).
    15. Céline Carrère & Maurice Schiff, 2005. "On the Geography of Trade. Distance is Alive and Well," Revue économique, Presses de Sciences-Po, vol. 56(6), pages 1249-1274.
    16. Jeffrey A Frankel, 1993. "Is there a Currency Bloc in the Pacific?," RBA Annual Conference Volume,in: Adrian Blundell-Wignall (ed.), The Exchange Rate, International Trade and the Balance of Payments Reserve Bank of Australia.
    17. Mauricio Cárdenas Santa María & Camilo García Jimeno, 2004. "El modelo gravitacional y el TLC entre Colombia y Estados Unidos," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 002527, FEDESARROLLO.
    18. Logan T. Lewis & Ryan Monarch & Michael J. Sposi & Jing Zhang, 2018. "Structural Change and Global Trade," International Finance Discussion Papers 1225, Board of Governors of the Federal Reserve System (U.S.).
    19. Suleiman Abu-Bader & Aamer S. Abu-Qarn, 2010. "Trade Liberalization or Oil Shocks: Which Better Explains Structural Breaks in International Trade Ratios?," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 250-264, May.
    20. Jun Ishii & Kei-Mu Yi, 1997. "The growth of world trade," Research Paper 9718, Federal Reserve Bank of New York.
    21. Bridgman, Benjamin, 2012. "The rise of vertical specialization trade," Journal of International Economics, Elsevier, vol. 86(1), pages 133-140.
    22. repec:spo:wpecon:info:hdl:2441/2537 is not listed on IDEAS
    23. Benjamin Bridgman, 2008. "Energy Prices and the Expansion of World Trade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 904-916, October.
    24. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    25. Sayeeda Bano, 2014. "An Empirical Examination of Trade Relations between New Zealand and China in the Context of a Free Trade Agreement," Working Papers in Economics 14/04, University of Waikato.

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