Trade and Income in the Long Run: Are There Really Gains, and Are They Widely Shared?
Nov 2017 · International Monetary Fund
5.0star
2 reviews
Ebook
36
Pages
About this ebook
In the cross section of countries, there is a strong positive correlation between trade and income, and a negative relationship between trade and inequality. Does this reflect a causal relationship? We adopt the Frankel and Romer (1999) identification strategy, and exploit countries' exogenous geographic characteristics to estimate the causal effect of trade on income and inequality. Our cross-country estimates for trade's impact on real income are consistently positive and significant over time. At the same time, we do not find any statistical evidence that more trade increases aggregate measures of income inequality. Heeding previous concerns in the literature (e.g. Rodriguez and Rodrik, 2001; Rodrik, Subramanian and Trebbi, 2004), we carefully analyze the validity of our geography-based instrument, and confirm that the IV estimates for the impact of trade are not driven by other direct or indirect effects of geography through non-trade channels.
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5.0
2 reviews
Anil Das
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October 17, 2021
AÀA BOSS NETWORK
Anil Das
- Flag inappropriate
October 10, 2021
AÀA BOSS NETWORK
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