Testing for Trade-Induced Investment-Led Growth

Many studies have found a positive correlation between trade and growth, but do not attempt to identify the economic mechanisms involved. This paper attempts to identify one of the mechanisms linking trade and growth. In particular, we present a novel theoretical model that establishes a link between trade liberalization and investment-led growth. Estimating equations are derived from the model and estimated with three stage least squares on a cross-country data sample. We find that domestic protection depresses investment and thereby slows growth. Foreign trade barriers also lower domestic investment, but the anti-investment effect is weaker and is less robust to sample and specification changes.

The interwar international monetary disorder: an international political economy approach

The lack of cooperation between central banks is the most widely accepted interpretation of the collapse of the gold-exchange standard. This explanation does not take account of the evolution of systems of payment: national commodity moneys were progressively replaced by fiduciary money. These changes were incompatible with the functioning of the classical gold standard. There was need, also at the international level, of greater elasticity of money supply. The gold-exchange standard was such an attempt. However, an international convertible money, to be accepted, presupposes the existence of an institutional framework that guarantees its value. This can only occur under certain conditions. The prevalence of a multilateral equilibrium in international relations impeded the existence of an international money with a high level of fiduciary content

Trade liberalization, investment and growht

This article presents five theoretical openness and growth links that can account for trade-induced investment led growth. The links are all demonstrated with a neoclassical growth model developed in the context of trade models that allow for imperfect competition and scale economies. This sort of old growth theory in a new trade model has not been thoroughly explored in the literature since the profession skipped from old-growth-old-trade models straigth to new-growth-new-trade models. Nonetheless, such models are necessary to explain several key aspects of the econometric evidence on trade and growth. For example, cross-country data suggests that openness influences growth only via its effects on investment, and suggests that openness promotes investment in all countries whatever the capital-intensity of their exports (contrary to the prediction of old-growth-old-trade models)

Interest group pressures, independence of central banks and supervision functions

Working paper n. 6/2003 del Dipartimento di scienze economiche e finanziarie dell'Universit\ue0 di Genov