Does Trade Cause Growth By JEFFREY A贸易造成增长的杰夫瑞. FRANKEL AND DAVID.ppt

Does Trade Cause Growth? JEFFREY A. FRANKEL AND DAVID ROMER* by ILKER KAYA The big question What is the impact of international trade on standards of living? Technical Challenge How are we going to measure the effect of international trade on income (standards of living) Problems The trade share may be endogenous: countries whose incomes are high for reasons other than trade may trade more. There is not enough available data Why this estimation is different? In contrast to conventional gravity equations for bilateral trade, this trade equation includes only geographic characteristics: countries’ sizes, their distances from one another, whether they share a border, and whether they are landlocked. Main assumption A country’s geographic characteristics have important effects on its income through their impact on trade We can use geographic characteristic as IV because; Countries’ geographic characteristics are not affected by their incomes, or by government policies and other factors that influence income. The instrument depends only on countries’ geographic characteristics, not on their incomes or actual trading patterns. average income in country i is a function of “international trade” and “within-country trade”, and other factors: (1) ln Yi = α + βTi + γWi + ?i. Yi = income per person, Ti = international trade, Wi= within-country trade, ?i = other influences on income. international trade (2) Ti =Ψ + ΦPi + δi Pi=proximity to other countries, δi= other factors within-country trade (3) Wi = η + λSi + νi Si = the country’s size, vi= residuals (other factors) The residuals in these three equations, ?i, δi and vi, are likely to be correlated. The key identifying assumption of this analysis is that countries’ geographic characteristics (their P ’s and S ’s) are uncorrelated with the residuals(? ) in equation (1) and correlated with T and W The main equation estimated; N = population A = area L