The Growth Effects of 1992
Working Paper 3119
DOI 10.3386/w3119
Issue Date
This paper demonstrates that several types of dynamic trade effects can be easily quantified, at least roughly. These dynamic effects on output are found to be much larger than the static effects measured by existing empirical studies of trade liberalizations. The paper exposits and measures the Ricardian dynamic trade effect (the link between trade and steady-state level of productive factors). It also exposits and measures the Grossman-Helpman dynamic trade effect (the link between trade and the steady-state rate of accumulation of productive factors) by calibrating two of the "new" growth theory models.