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Structural Change and Slowdown of International Trade

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Listed:
  • Ryan Monarch

    (Federal Reserve Board)

  • Jing Zhang

    (Federal Reserve Bank of Chicago)

  • Logan Lewis

    (Federal Reserve Board of Governors)

Abstract

As countries get richer, they consume a larger share of their income in the services or less-traded sector. This structural change pattern is one of the most salient features of economic development. Consequently, as the world economy becomes more services oriented, it will become "less open" in terms of total trade over GDP. Thus structural change impacts long-run global trade. This paper quantitatively studies the impact of structural change on global trade, and we find that the world trade over GDP ratio would have been about 17 percentage points higher if structural change had not happened. We find little evidence that this drag on trade growth has become more pronounced in recent years.

Suggested Citation

  • Ryan Monarch & Jing Zhang & Logan Lewis, 2017. "Structural Change and Slowdown of International Trade," 2017 Meeting Papers 1542, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:1542
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    More about this item

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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