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Trade and economic growth: A re-examination of the empirical evidence

  • Busse, Matthias
  • Königer, Jens

While trade integration is often regarded as a principal determinant of economic growth, the empirical evidence for a causal linkage between trade and growth is ambiguous. This paper argues that the effect of trade in dynamic panel estimations depends crucially on the specification of trade. Both from a theoretical as well as an empirical point of view one specification is preferred: the volume of exports and imports as a share of lagged total GDP. For this trade measure, a positive and highly significant impact on economic growth can be found.

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Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 123.

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Date of creation: 2012
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Handle: RePEc:zbw:hwwirp:123
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  1. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
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  3. repec:chb:bcchwp:03 is not listed on IDEAS
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  9. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
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  12. Gundlach, Erich, 2005. "Solow vs. Solow: Notes on identification and interpretation in the empirics of growth and development," Open Access Publications from Kiel Institute for the World Economy 3728, Kiel Institute for the World Economy (IfW).
  13. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March.
  14. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
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  17. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
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