A Further Investigation of the Link between Trade and Income Jan
نویسندگان
چکیده
The link between trade and income has received increasing attention as countries try to justify their trade-promoting policies. Recent work of Frankel and Romer (1999) examines the effect of trade on income. We explore how the estimates of the trade effect change when we relax the assumption of heteroscedasticity in the bilateral trade equation used to construct the instrument for the IV regression. Because the instrument is constructed through a nonlinear transformation, unequal disturbance variances imply inconsistency and not just inefficiency of the Frankel-Romer estimates. We find a smaller positive effect of trade than that found by Frankel and Romer. Classification code: C1, F4
منابع مشابه
The Investigation of Foreign trade effect on Income disturbance between each rural income deciles of Iran.
This paper investigated the foreign trade effect on Gini coefficient in each income deciles based on VAR and VCEM models. In connection with this, the time series data over the period 1369-1394 are employed. The results indicate that, in short –term, rising in foreign trade volume rising causes the Gini coefficient lessen in all income deciles; consequently, the income disturbance will be more ...
متن کاملTrade liberalization, Growth and Inequality in Bangladesh: An Empirical Analysis
This paper examines time series evidence to establish a link between trade, economic growth and income inequality in Bangladesh. The empirical results from a Vector Autoregression (VAR) model suggest that there is some evidence of trade liberalization accelerating growth in Bangladesh. Trade openness promotes investment. We find little evidence of trade affecting income distribution or of incom...
متن کاملOn the stability of equilibrium for a reformulated foreign trade model of three countries
In this paper, we study the stability of equilibrium for a foreign trade model consisting of three countries. As the gravity equation has been proven an excellent tool of analysis and adequately stable over time and space all over the world, we further enhance the problem to three masses. We use the basic Structure of Heckscher–Ohlin–Samuelson model. The national income equals consumption outla...
متن کاملOpenness of Trade, Unemployment and Inequality of Income Distribution: Comparison between Developed and Developing Countries
In the discussions of trading, unemployment and income distribution inequality, this question is raised by economists that in economic development of developing and developed countries, which policy is necessary in the first stage. Is trading liberalization the pre-requirement of transfer from a close economy to a relative open economy and is it necessary for the developed economy compared to o...
متن کاملThe Impact of Trade Openness on Economic Growth in Pakistan; ARDL Bounds Testing Approach to Co-integration
T he main objective of this paper was the investigation of the impact of the trade openness on economic growth in Pakistan. We have been employed both the Johensen and Autoregressive Distributed Lag (ARDL) Co-integration together with ECM Techniques for the period 1975-2016. The empirical estimated results are the sound evidence that there exists a short...
متن کامل