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The Cost Of Trade Disruptions At Different Stages Of Development

Author

Listed:
  • Juan Carlos Conesa
  • Matthew J. Delventhal
  • Pau S. Pujolas
  • Gajendran Raveendranathan

Abstract

We study trade disruptions at different stages of development in a two‐country, three‐sector model of Spain and United Kingdom from 1850 to 2000. The impact of trade disruptions depends on trade openness and the productivity gap between countries. A trade collapse today (more openness, less gap) comparable to the Inter‐War Trade Collapse (IWTC) decreases the capital stock threefold (12% instead of 4%) and lifetime consumption fourfold (1.58% instead of 0.37%). Capital accumulation amplifies the cost of trade disruptions. The IWTC promoted Spanish industrialization, while the opposite would be true today.

Suggested Citation

  • Juan Carlos Conesa & Matthew J. Delventhal & Pau S. Pujolas & Gajendran Raveendranathan, 2024. "The Cost Of Trade Disruptions At Different Stages Of Development," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(3), pages 1133-1161, August.
    • Handle: RePEc:wly:iecrev:v:65:y:2024:i:3:p:1133-1161
    DOI: 10.1111/iere.12690
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    References listed on IDEAS

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