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A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth

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  • Michael Funke
  • Marc Gronwald

Abstract

In this paper, we apply a convex hull approach to counterfactual analysis of trade openness and growth. The experiments we choose evaluate the importance of trade openness for growth across African countries. Specifically, we ask the question “what would happen if African countries were more open?”. The evidence indicates that several countries don´t fall within the convex hull of the observed data and therefore counterfactual inferences are risky. This conclusion is at odds with the literature arguing that greater trade openness would unequivocally lead to higher growth in Africa.

Suggested Citation

  • Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," CESifo Working Paper Series 2692, CESifo.
  • Handle: RePEc:ces:ceswps:_2692
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp2692.pdf
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    More about this item

    Keywords

    openness; economic growth; robustness; counterfactuals; convex hull;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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