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The Long-Run Effects of Structural Change and the Treatment of International Capital Accumulation, Mobility and Ownership

  • George Verikios
  • Kevin Hanslow

Taking a commonly-used and commonly-available trade policy model as our starting point, we examine the long-run effects of large-scale structural change with and without international capital accumulation, mobility and ownership. We demonstrate the relative merits and limitations of different treatments of international capital accumulation, mobility and ownership. In doing so, we present a treatment of international capital accumulation, mobility and ownership that gives policy analysts an approach to analysing the effects of large-scale structural policies that is not too heavy in its theoretical and data demands. Our findings support the work of Baldwin (1992) and others who have demonstrated that ignoring capital accumulation, mobility and ownership underestimates net output and welfare effects of large-scale structural change.

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Paper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-179.

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Date of creation: Jan 2009
Date of revision:
Publication status: Published in Global Economic Review, vol. 38, no. 3, 2009, pp. 229-50.
Handle: RePEc:cop:wpaper:g-179
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  1. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-74, February.
  2. McKibbin, W.J. & Wilcoxen, P.J., 1995. "The Theoretical and Empirical Structure of the G-Cubed Model," Papers 118, Brookings Institution - Working Papers.
  3. Marco Fugazza & David Vanzetti, 2006. "A South South Survival Strategy: The Potential for Trade among Developing Countries," UNCTAD Blue Series Papers 33, United Nations Conference on Trade and Development.
  4. Anderson, Kym & Martin, Will & Valenzuela, Ernesto, 2006. "The relative importance of global agricultural subsidies and market access," World Trade Review, Cambridge University Press, vol. 5(03), pages 357-376, November.
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  6. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
  7. Walmsley, Terrie L., 2002. "Incorporating international ownership of endowments into a global applied general equilibrium model," Economic Modelling, Elsevier, vol. 19(5), pages 679-707, November.
  8. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Society for Computational Economics, vol. 9(2), pages 83-127, May.
  9. Adams, Philip D., 2005. "Interpretation of results from CGE models such as GTAP," Journal of Policy Modeling, Elsevier, vol. 27(8), pages 941-959, November.
  10. Smith, M. A. M., 1976. "Trade, growth and consumption in alternative models of capital accumulation," Journal of International Economics, Elsevier, vol. 6(4), pages 371-384, November.
  11. Islam, Sulequl, 2003. "Expansions of the European Union and the NAFTA: Implications for New and Non-Member countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(2).
  12. Martin, W. & Winters, L.A., 1995. "The Uruguay Round and the Developing Countries," World Bank - Discussion Papers 307, World Bank.
  13. Nijkamp, Peter & Wang, Shunli & Kremers, Hans, 2005. "Modeling the impacts of international climate change policies in a CGE context: The use of the GTAP-E model," Economic Modelling, Elsevier, vol. 22(6), pages 955-974, December.
  14. Hoekman, B. & Sauve, P., 1995. "Liberalizing Trade in Services," World Bank - Discussion Papers 243, World Bank.
  15. Ianchovichina, Elena & Robert McDougall, 2000. "Theoretical Structure of Dynamic GTAP," GTAP Technical Papers 480, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  16. Smith, M A M, 1977. "Capital Accumulation in the Open Two-Sector Economy," Economic Journal, Royal Economic Society, vol. 87(346), pages 273-82, June.
  17. Brockmeier, Martina & Pelikan, Janine, 2008. "Agricultural market access: A moving target in the WTO negotiations?," Food Policy, Elsevier, vol. 33(3), pages 250-259, June.
  18. Santiago Fernandez de Córdoba & Sam Laird & David Vanzetti, 2005. "Trick or Treat? Development Opportunities and Challenges in the WTO Negotiations on Industrial Tariffs," The World Economy, Wiley Blackwell, vol. 28(10), pages 1375-1400, October.
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