On the Dynamics of Trade Reform
28 Pages Posted: 30 Dec 2014
Date Written: April 1999
The empirical evidence on trade reforms suggests that these have a surprisingly small impact on the country's industrial configuration. This industrial structure inertia is difficult to rationalize in standard trade models. This paper develops a two-sector industry dynamics model in which industrial composition inertia arises naturally. The model is then used to study the consequences of different types of trade reforms (e.g. permanent, temporary, gradual, pre-announced) on investment, employment composition and income distribution.
JEL Classification: F11
Suggested Citation: Suggested Citation