Trade Liberalisation, Economic Crises and Growth

Rodney Edward Falvey (), Neil Foster-McGregor () and David Greenaway ()

Discussion Papers from University of Nottingham, GEP

Abstract: Many economic reforms are undertaken at a time of economic crisis. But is this a good time 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 post-liberalisation growth effects in the crisis and non-crisis regimes. We find that the post-liberalisation growth depends on the characteristics of the crisis. Broadly speaking, an internal crisis implies lower growth and an external crisis higher growth relative to the non-crisis regime. These effects appear to be present in both the short and longer runs.

Keywords: Trade liberalisation; Growth; Crises (search for similar items in EconPapers)
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Journal Article: Trade Liberalization, Economic Crises, and Growth (2012)
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Persistent link: http://EconPapers.repec.org/RePEc:not:notgep:08/14

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