Trade and Growth: An Empirical Investigation

51 Pages Posted: 6 Sep 1996 Last revised: 16 May 2000

See all articles by Jeffrey A. Frankel

Jeffrey A. Frankel

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

David H. Romer

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 1996

Abstract

Countries' geographic characteristics have important effects on their trade, and are plausibly uncorrelated with other determinants of their incomes. This paper therefore constructs measures of the geographic component of countries' trade and uses those measures to obtain instrumental variables estimates of the effect of trade on income. The results suggest that ordinary least squares estimates understate the effects of trade, and that trade has a quantitatively large, significant, and robust positive effect on income.

Suggested Citation

Frankel, Jeffrey A. and Romer, David H., Trade and Growth: An Empirical Investigation (March 1996). NBER Working Paper No. w5476. Available at SSRN: https://ssrn.com/abstract=4192

Jeffrey A. Frankel (Contact Author)

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David H. Romer

University of California, Berkeley - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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United States

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