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Vertical Specialization and Nonstationarities in International Trade Series

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  • Marcela Sabaté

    (Institute for International Integration Studies, Trinity College Dublin)

Abstract

In this paper, we analyze the statistical properties of a large sample of trade openness series in the Second Era of Globalization (from 1948 to the recent crisis) and find a clear stationary pattern for developing countries versus a unit root pattern for developed countries. Most interestingly, we show how the progress of vertical specialization can rationalize this presence of unit roots in the ratio of export to GDP. We use scattered data of vertical specialization (defined as the imported input content of exports) for ten OECD countries to construct yearly export series free from the upwards bias introduced by vertically specialised trade in the official values. We find that when the statistical analysis is applied to the unbiased series of openness, they become trend stationary for nearly all the countries, corroborating the responsibility of vertical specialization in the presence of unit roots.

Suggested Citation

  • Marcela Sabaté, 2009. "Vertical Specialization and Nonstationarities in International Trade Series," The Institute for International Integration Studies Discussion Paper Series iiisdp309, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp309
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    More about this item

    Keywords

    Vertical Specialization; Unit Roots; Multi-accounting bias; Degree of Development;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F15 - International Economics - - Trade - - - Economic Integration

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