Trade Costs and Current Accounts

Clément Nedoncelle

Post-Print from HAL

Abstract: Are trade cost reductions a plausible explanation for growing global current account imbalances? I advocate that changes in trade costs affect trade and production structures, which is likely to affect national savings and investment. Explicitly adding trade costs à la Markusen and Venables into Jin's framework, this augmented model predicts that trade cost reductions affect the current account through changes in the industrial structure. Empirical evidence confirms that the interaction of trade costs and capital intensity drives current account balances. I also provide evidence that the response of current accounts to changes in trade costs depends on the capital intensity of production and on the depth of regional agreements on trade and factor mobility. Aside from the direct effect generally emphasised in standard macro-level analysis, changes in production patterns could therefore be an additional channel of impact of regional integration on current accounts.

Keywords: trade cost reductions; account imbalances; production patterns (search for similar items in EconPapers)
Date: 2015-09
References: Add references at CitEc
Citations:

Published in The World Economy, 2015, 39 (10), pp.1653--1672. ⟨10.1111/twec.12318⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Trade Costs and Current Accounts (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01533547

DOI: 10.1111/twec.12318

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().