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| Author: | Lane, P. R. |
| Title: | International trade and economic convergence: the credit channel |
| Journal: | Oxford Economic Papers
2001 : APR, VOL. 53:2, p. 221-240 |
| Index terms: | INTERNATIONAL TRADE ECONOMIC CONVERGENCE CREDIT |
| Language: | eng |
| Abstract: | In this paper, the authors examine a particular mechanism by which international trade accelerates economic convergence. The authors develop a model of growth under credit constraints in which international trade expands access to credit. The authors show in numerical simulations that reasonable values for openness generate convergence rates that match well the empirical estimates. The authors econometrically investigate a key prediction of the model - that more open economies exhibit greater debt to output ratios - and find substantial support in the data for this claim. This remains true even when they control for a host of additional factors and conduct robustness checks. |
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