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Growth and Trade: A Structural Estimation Framework

Author

Listed:
  • Yoto Yotov

    (Drexel University)

  • Mario Larch

    (University of Bayreuth)

  • James Anderson

    (Boston College)

Abstract

We build and quantify a structural general equilibrium model of growth and trade. Trade affects growth through changes in consumer and producer prices that in turn stimulate or impede physical capital accumulation. At the same time, growth affects trade, directly through changes in country size and indirectly through altering the incidence of trade costs. The model combines structural gravity with a simple capital accumulation specification of the transition between steady states. An intuitive, self-sufficient econometric system results. Counterfactual experiments based on the estimated model give evidence for strong causal relationships between growth and trade.

Suggested Citation

  • Yoto Yotov & Mario Larch & James Anderson, 2015. "Growth and Trade: A Structural Estimation Framework," 2015 Meeting Papers 851, Society for Economic Dynamics.
  • Handle: RePEc:red:sed015:851
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    File URL: https://economicdynamics.org/meetpapers/2015/paper_851.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gabriel Felbermayr & Benedikt Heid & Mario Larch & Erdal Yalcin, 2015. "Macroeconomic potentials of transatlantic free trade: a high resolution perspective for Europe and the world," Economic Policy, CEPR;CES;MSH, vol. 30(83), pages 491-537.

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