Trade and Growth: An Empirical Investigation

Abstract

Countries' geographic characteristics have important effects on their trade, and are plausibly uncorrelated with other determinants of their incomes. This paper therefore constructs measures of the geographic component of countries' trade and uses those measures to obtain instrumental variables estimates of the effect of trade on income. The results suggest that ordinary least squares estimates understate the effects of trade, and that trade has a quantitatively large, significant, and robust positive effect on income.

Keywords

Ordinary least squaresInstrumental variableUncorrelatedEconomicsEconometricsInternational economicsInternational tradeStatisticsMathematics

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Publication Info

Year: 1996
Type: preprint
Citations: 115
Access: Closed

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APA Style

                            
                                    Jeffrey A. Frankel, 
                                
                                    David Romer
                                
                            (1996). 
                            Trade and Growth: An Empirical Investigation. 
                            RePEc: Research Papers in Economics
                            
                            .