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Trade Liberalisation, Economic Crises And Growth, Rodney Falvey, Neil Foster, David Greenaway
Trade Liberalisation, Economic Crises And Growth, Rodney Falvey, Neil Foster, David Greenaway
Rodney Falvey
Many economic reforms are undertaken at a time of economic crisis. But is this a good time for a country to undertake trade reform? In this paper we investigate whether an economic crisis at the time of trade liberalisation affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators commonly used in the literature, to identify the relevant “crisis values” and to estimate the differential postliberalisation growth effects in the crisis and non-crisis regimes. We find that the magnitude of the acceleration in postliberalisation growth depends on the characteristics of the crisis. Although trade liberalisation …
Trade Liberalisation And Growth: A Threshold Expectation, Rod Falvey, Neil Foster-Mcgregor, Ahmed Khalid
Trade Liberalisation And Growth: A Threshold Expectation, Rod Falvey, Neil Foster-Mcgregor, Ahmed Khalid
Rodney Falvey
Openness and trade liberalisation variables are consistently estimated to have significant positive coefficients in panel growth regressions. Many arguments have been advanced as to why and how more open or liberalised economies might grow faster, but the specific channels this process uses have begun to be investigated only recently. We continue these efforts by including a variable identifying the date of trade liberalisation in a system of equations that captures the determinants of growth in per capita income. Four ‘channels’ are considered: capital formation, the share of government, the economy’s openness to trade and its price distortions. We include the …