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Learning the Wealth of Nations

  • Giorgio Primiceri

    (Northwestern University)

  • Alexander Monge-Naranjo

    (Northwestern University)

  • Francisco Buera

    (Northwestern University)

We study the evolution of trade policies over time and across countries. We consider a model in which own and neighbors' past experiences influence policy choices, through their effect on policymakers' beliefs. We estimate the model using a large panel of countries. We find that there is a strong geographical component to learning, which is crucial to explain the slow adoption of liberal policies during the post-war period. Our model also predicts that there would be a substantial reversal to protectionism if nowadays the world was hit by a shock of the size of the Great Depression.

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Paper provided by Society for Economic Dynamics in its series 2008 Meeting Papers with number 179.

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Date of creation: 2008
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Handle: RePEc:red:sed008:179
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/society.htm
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