Trade and Catching Up to the Industrial Leader
Juan Carlos Conesa (),
Matthew J. Delventhal,
Pau Pujolas () and
Department of Economics Working Papers from McMaster University
We study the impact of trade on a country catching up to the industrial leader. We calibrate our dynamic, two-country model to Spain and UK from 1850 to 2000, accounting for the inter-war trade collapse (IWTC) and the subsequent catch up by Spain. In our model, the effects of trade disruptions are stronger with more distance to the leader and more openness. A collapse today (less distance, more openness) similar to the IWTC (more distance, less openness) decreases the capital stock thrice as much (12% instead of 4%). Importantly, traded varieties would fall today but increased during the IWTC.
Keywords: Structural Transformation; International Trade (search for similar items in EconPapers)
JEL-codes: F11 F12 N10 N60 (search for similar items in EconPapers)
Pages: 31 pages
New Economics Papers: this item is included in nep-his and nep-ore
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Working Paper: Trade and Catching Up to the Industrial Leader (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2019-12
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