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Trade Policy, Exchange Rates, and Growth

In: Reform, Recovery, and Growth: Latin America and the Middle East

  • Sebastian Edwards

This paper analyzes the relationship between trade policy and economic performance. The paper is divided in two fundamental parts. The first one uses a cross country data set to investigate the relationship between trade policy and productivity growth. It is found that countries that are more open to the rest of the world have experienced faster growth in total factor productivity than countries with high trade barriers. In the second part the recent Latin American experiences with trade liberalization reforms are investigated. It is shown that in the last few years the Latin American countries have gone from having one of the most distorted external sectors, to having very low degrees of protectionism. The extent of the liberalization efforts is documented and the effect on productivity and exports is investigated.

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This chapter was published in:
  • Rudiger Dornbusch & Sebastian Edwards, 1995. "Reform, Recovery, and Growth: Latin America and the Middle East," NBER Books, National Bureau of Economic Research, Inc, number dorn95-1, December.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7649.
    Handle: RePEc:nbr:nberch:7649
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. Condon, Timothy & Corbo, Vittorio & de Melo, Jaime, 1985. "Productivity growth, external shocks, and capital inflows in Chile: A general equilibrium analysis," Journal of Policy Modeling, Elsevier, vol. 7(3), pages 379-405.
    2. Sebastion Edwards, 1988. "Real and Monetary Determinants of Real Exchange Rate Behavior: Theory and Evidence from Developing Countries," UCLA Economics Working Papers 506, UCLA Department of Economics.
    3. Corbo, Vittorio & De Melo, Jaime, 1985. "Overview and summary," World Development, Elsevier, vol. 13(8), pages 863-866, August.
    4. Robert P. Flood & Peter Isard, 1988. "Monetary Policy Strategies," NBER Working Papers 2770, National Bureau of Economic Research, Inc.
    5. Calvo, Guillermo A, 1978. "On the Time Consistency of Optimal Policy in a Monetary Economy," Econometrica, Econometric Society, vol. 46(6), pages 1411-28, November.
    6. McKinnon, Ronald I., 1982. "The order of economic liberalization: Lessons from Chile and Argentina," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 17(1), pages 159-186, January.
    7. Fischer, Stanley, 1988. "Symposium on the Slowdown in Productivity Growth," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 3-7, Fall.
    8. Dixit, Avinash, 1985. "Tax policy in open economies," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 6, pages 313-374 Elsevier.
    9. Alex Cukierman & Sebastian Edwards & Guido Tabellini, 1989. "Seigniorage and Political Instability," NBER Working Papers 3199, National Bureau of Economic Research, Inc.
    10. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    11. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
    12. Krueger, Anne O, 1978. "Alternative Trade Strategies and Employment in LDCs," American Economic Review, American Economic Association, vol. 68(2), pages 270-74, May.
    13. Jere H. Behrman, 1976. "Foreign Trade Regimes and Economic Development: Chile," NBER Books, National Bureau of Economic Research, Inc, number behr76-1, December.
    14. Corden, W M, 1969. "Effective Protective Rates in the General Equilibrium Model: A Geometric Note," Oxford Economic Papers, Oxford University Press, vol. 21(2), pages 135-41, July.
    15. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
    16. Peter Montiel & Bijan B. Aghevli & Mohsin S. Khan, 1991. "Exchange Rate Policy in Developing Countries: Some Analytical Issues," IMF Occasional Papers 78, International Monetary Fund.
    17. Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890.
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