This paper demonstrates that several types of dynamic trade effects can be
easily quantified, at least roughly. These dynamic effects on output are found
to be much larger than the static effects measured by existing empirical
studies of trade liberalizations. The paper exposits and measures the
Ricardian dynamic trade effect (the link between trade and steady-state level
of productive factors). It also exposits and measures the Grossman-Helpman
dynamic trade effect (the link between trade and the steady-state rate of
accumulation of productive factors) by calibrating two of the "new" growth
theory models.
*Published:
Economic Policy, No. 9, pp. 1-42, (1989).
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