Regional Effects of Trade Reform: What Is the Correct Measure of Liberalization?

Brian Kovak

American Economic Review, 2013, vol. 103, issue 5, 1960-76

Abstract: A growing body of research examines the regional effects of trade liberalization using a weighted average of trade policy changes across industries. This paper develops a specific-factors model of regional economies that provides a theoretical foundation for this intuitively appealing empirical approach and also provides guidance on treatment of the nontraded sector. In the context of Brazil's early 1990s trade liberalization, I find that regions facing a 10 percentage point larger liberalization-induced price decline experienced a 4 percentage point larger wage decline. The results also confirm the empirical relevance of appropriately dealing with the nontraded sector.

JEL-codes: F13 F16 O19 O24 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.5.1960
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Citations: View citations in EconPapers (339)

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