TY  - JOUR
AU  - Baldwin,Richard E.
AU  - Forslid,Rikard
TI  - Trade Liberalization and Endogenous Growth: A q-Theory Approach
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5549
PY  - 1996
Y2  - April 1996
UR  - http://www.nber.org/papers/w5549
L1  - http://www.nber.org/papers/w5549.pdf
N1  - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org

Rikard Forslid
Stockholm University
E-Mail: Rikard.Forslid@ne.su.se
AB  - This paper has two purposes.  It introduces a direct approach to policy analysis in endogenous growth models - the q-theory approach - and uses this to illustrate several new openness-and-growth links that appear when we enrich the economic content of the early trade and growth models.  The approach - inspired by Tobin's q - is merely a change of state variables and re-interpretation of steady-state conditions.  The main difference is its focus on investment, which is after all, the heart of growth models.  The approach's simplicity permits us to complicate the early models in interesting directions and to explicitly include trade barriers.  The latter allows study of incremental policy reform rather than mere shifts from autarky to free trade (or small deviations from free trade) as in early literature.
ER  -