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Openness to International Trade and Economic Growth : A Cross-Country Empirical Investigation

Author

Listed:
  • Bulent Ulasan

Abstract

This paper examines the long-run relationship between trade open-ness and economic growth across countries over the period 1960-2000. Two strategies are followed in empirical investigation. First, we extend the augmented neo-classical growth model with an openness variable and estimate it by using a battery of openness measures suggested in the literature. We also construct three composite trade policy indexes consisting of weighted averages of tari� rates, non-tari� barriers and black market premium for foreign exchange rate. Second, we implement Bayesian model averaging technique to deal with the model uncertainty, a fundamental problem which has been plaguing the previous works on the topic. Our �ndings show that there is no robust link between trade openness and long-run economic growth.

Suggested Citation

  • Bulent Ulasan, 2014. "Openness to International Trade and Economic Growth : A Cross-Country Empirical Investigation," Working Papers 1407, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  • Handle: RePEc:tcb:wpaper:1407
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2014/14-07
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    Citations

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    Cited by:

    1. William MESIET, 2023. "The nexus of foreign trade and economic growth in Tanzania. Examining the influence of COVID-19 pandemic. Evidence from vector error correction model," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(636), A), pages 273-296, Autumn.

    More about this item

    Keywords

    Economic Growth; Trade Openness; Cross-Country Growth Regression; Model Uncertainty; Bayesian Model Averaging;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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