Trade and Catching Up to the Industrial Leader

Juan Carlos Conesa, Matthew Delventhal, Pau Pujolas and Gajendran Raveendranathan

Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: 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

Date: 2019
New Economics Papers: this item is included in nep-dge, nep-his and nep-int
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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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