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Openness and growth in a historical perspective: a VECM approach

Author

Listed:
  • Giovanni Federico

    (University of Pisa, CEPR)

  • Paul Sharp

    (University of Southern Denmark, CAGE, CEPR)

  • Antonio Tena-Junguito

    (Universidad Carlos III Madrid)

Abstract

Since Adam Smith, most economists have held the belief that trade fosters economic growth, although it has not been possible to establish a strong causal relationship. The results of growth regressions are, at best, mixed, and several historical studies have found a positive relationship between tariffs and economic growth in the nineteenth century. This paper adopts a different strategy. We look for cointegration between GDP per capita and openness for about thirty countries since 1830. About half return no cointegration – i.e. no relationship. The rest show mixed results, which change through time. An ordered probit model suggests that significantly positive relationships are more likely at low-to-middle income levels.

Suggested Citation

  • Giovanni Federico & Paul Sharp & Antonio Tena-Junguito, 2017. "Openness and growth in a historical perspective: a VECM approach," Working Papers 0118, European Historical Economics Society (EHES).
  • Handle: RePEc:hes:wpaper:0118
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    References listed on IDEAS

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    Cited by:

    1. Reto Föllmi & Angela Fuest & Philipp an de Meulen & Martin Micheli & Torsten Schmidt & Lina Zwick, 2018. "Openness and productivity of the Swiss economy," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-21, December.
    2. Bajo-Rubio, Oscar, 2020. "Exports and long-run growth: The case of Spain, 1850-2017," GLO Discussion Paper Series 461, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Openness; growth; VECM; cointegration; trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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