Trade and Catching Up to the Industrial Leader
Juan Carlos Conesa (),
Pau Pujolas () and
Department of Economics Working Papers from Stony Brook University, Department of Economics
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 tothe leader and more openness. A collapse today (less distance, more openness) similarto 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 dur-ing the IWTC
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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:nys:sunysb:19-04
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