Trade and the Neoclassical Growth Model |
Dan Ben-David, Michael B. Loewy, |
Tel Aviv University, NBER, and CEPR University of South Florida |
Copyright ©2003 The Journal of Economic Integration |
ABSTRACT |
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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
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REFERENCE |
1. |
Ventura, J. (1997), Growth and Interdependence, Quarterly Journal of Economics 112(1), 57-84. |
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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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