TFP, Capital Deepening, and Gains from trade

B Ravikumar, Ana Maria Santacreu and Michael Sposi

No 2022-034, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We study welfare gains from trade in a dynamic, multicountry model with capital accumulation. We compute the exact transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization. We find that while the dynamic gains are different across countries, consumption transition paths look similar except for scale. In addition, dynamic gains accrue gradually and are about 60 percent of steady-state gains for every country. Finally, the contribution of capital accumulation to dynamic gains is four times that of TFP.

Keywords: dynamic gains from trade; capital deepening; total factor productivity (search for similar items in EconPapers)
JEL-codes: E22 F11 O11 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2022-09-27
New Economics Papers: this item is included in nep-dge
Note: Publisher DOI: https://doi.org/10.20955/r.105.150-76
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Published in Federal Reserve Bank of St. Louis Review

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Journal Article: TFP, Capital Deepening, and Gains from Trade (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:94854

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DOI: 10.20955/wp.2022.034

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