On the Dynamics of Trade Reform

Rui Albuquerque, Sergio Rebelo

NBER Working Paper No. 6700
Issued in August 1998
NBER Program(s):   EFG   ITI

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.

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Published: Albuquerque, Rui and Sergio Rebelo. "On The Dynamics Of Trade Reform," Journal of International Economics, 2000, v51(1,Jun), 21-47.

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