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Journal of Economic Integration 2003 March;18(1) :1-16.
DOI: https://doi.org/10.11130/jei.2003.18.1.1
Trade and the Neoclassical Growth Model
Dan Ben-David and 
Michael B. Loewy 
Tel Aviv University, NBER, and CEPR
University of South Florida
Copyright ©2003 Journal of Economic Integration
ABSTRACT
The model developed in this paper expands upon the traditional neoclassical exogenous growth model by facilitating a long-run growth analysis of the impact of openness to trade within a multi-country framework. Openness affects growth by impacting the extent of knowledge spillovers from abroad. This feature effectively converts the traditional closed-economy exogenous growth model into a multi-country, open-economy endogenous growth model. Nevertheless, the conditional convergence and identical growth predictions of the neoclassical model are preserved here with the extent of trade now playing a role in determining the relative heights of the countries' parallel output paths.
Keywords: | Growth | Convergence | Trade liberatization
 
REFERENCE
1. Ventura, J. (1997), Growth and Interdependence, Quarterly Journal of Economics 112(1), 57-84.
2. Tanzi, V. and H.H. Zee (2000), Tax Policy for Emerging Markets: Developing Countries. National Tax Journal 53(2), 299-322.
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