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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, 1990. "Why has trade grown faster than income?," International Finance Discussion Papers 390, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:390
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