哈佛大学肯尼迪学院教授Frankel的论文之十四TRADEANDGROWTH.docx
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哈佛大学肯尼迪学院教授Frankel的论文之十四TRADEANDGROWTH.docx
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哈佛大学肯尼迪学院教授Frankel的论文之十四TRADEANDGROWTH
firstdraftDec.27,1994
Revised2/8/95,6/6and10/30/95;2/26/96;draft7:
RevisedJune21+7/18sup+,1996
NBERWorkingPaperNo.5732,August1996.TobepublishedinNICsAfterAsianMiracle,NewWorldOrderSeries,vol.23,editedbyH.Singer,N.HattiandR.Tandon,BRPublishingCorporation(India)Ltd.,forthcoming2000.
TRADEANDGROWTHINEASTASIANCOUNTRIES:
CAUSEANDEFFECT?
JeffreyA.Frankel
DavidRomer
TeresaCyrus
DepartmentofEconomics
UniversityofCalifornia,Berkeley,CA94720-3880
keywords:
export-ledgrowth,Asianmiracle,EastAsia,gravitymodel
JELClassificationnumbers:
O1,O4,O53
TheauthorswouldliketothankforsupporttheInstituteforInternationalEconomicsinWashington,D.C.,whereFrankelwasaSeniorFellowwhenmuchofthispaperwaswritten;theExport-ImportInsuranceDepartmentofJETRONewYork;theCenterforInternationalandDevelopmentEconomicsResearch,fundedatU.C.BerkeleybytheFordFoundation;andtheJapan-UnitedStatesFriendshipCommission,aU.S.governmentagency.TheauthorswouldalsolikethethankSusantoBasu,MichaelDotsey,BrianEaston,RobertHall,N.GregoryMankiw,GlennRudebusch,JamesStock,Shang-JinWei,RichardZeckhauserforcommentsonearlierdrafts.
TRADEANDGROWTHINEASTASIANCOUNTRIES:
CAUSEANDEFFECT?
ABSTRACT
Estimatesofgrowthequationshavefoundaroleforopenness,particularlyinexplainingrapidgrowthamongEastAsiancountries.Butmajorconcernsofsimultaneouscausalitybetweengrowthandtradehavebeenexpressed.Thisstudyaimstodealwiththeendogeneityoftradebyusingasinstrumentalvariablestheexogenousdeterminantsfromthegravitymodelofbilateraltrade,suchasproximitytotradingpartners.WefindthattheeffectofopennessongrowthisevenstrongerwhenwecorrectfortheendogeneityofopennessthaninstandardOLSestimates.WeconcludewithestimatesofhowmuchhasbeencontributedtoEastAsiangrowthbothbytheexogenousorgeographicalcomponentofopennessandbytheresidualorpolicycomponent.
JeffreyA.FrankelDavidRomer
DepartmentofEconomicsDepartmentofEconomics
549EvansHall#3880549EvansHall#3880
UniversityofCaliforniaUniversityofCalifornia
Berkeley,CA94720-3880Berkeley,CA94720-3880
TeresaCyrus
DepartmentofEconomics
549EvansHall#3880
UniversityofCalifornia
Berkeley,CA94720-3880
TherecordofrapidgrowththatmanyEastAsiancountrieshaveattainedoverthelastthreedecadesissospectacularthatithasbeenclaimedassupportingevidencebybothsidesineachofthreedebates(atleast).FirstisthedebateonwhethertheEastAsians'successisproofofthesuperiorityofprotectionistpoliciesontheonehand,orofoutward-orientedpoliciesontheother.SecondisthebroaddebatewhethertheEastAsianphenomenonisevidenceofthevirtuesofgovernmentinterventioningeneral,oroflaissez-fairemarket-orientedpolicies.<1>Thirdisthedebateoverwhetherthestatisticssupportgrowthbasedonsimpleaccumulationofthefactorsofproduction(labor,education,andespeciallyphysicalcapital),orgrowthbasedonimprovementsintechnologyandefficiency(measuredasanincreaseintotalfactorproductivity,orthe"Solowresidual").<2>Finally,inthelattercase,therewouldalsobethequestionwhetherthisincreaseintechnicalefficiencywasdue(i)tosuperiorgovernmentpolicies,inwhichcaseEastAsiamayhavevaluablelessonsforothercountries,(ii)tosomesuperiormodeofsocialorganization,perhapssomeexogenousaspectofConfucianculture,(iii)tosimplecatch-upwiththetechnologicallymoreadvancedindustrializedcountries<3>,or(iv)tochance.<4>
Thesubjectofthispaperistrade-ledgrowth.Inmeasuringtrade,welumptogetherexportsandimports.AsemphasizedbyGrossmanandHelpman(1991a,b)technologicalspilloverscouldcomeviaimportsaseasilyasexports.
QuiteafewempiricalstudiesofgrowthratesacrosscountriesfindthattheratioofexportstoGDP,orsomeothermeasureofopenness,isasignificantdeterminantofgrowth<5>,andoftenthatitisanimportantdeterminantforEastAsiancountriesinparticular.<6>AtypicalspecificationbeginswiththestandarddeterminantsofGDPsuggestedbyneoclassicalgrowththeory,andaddsavariableforexportsasashareofGDP.Forexample,Feder(1982)regressesgrowthratesfor31semi-industrializedcountriesovertheperiod1964-1973againstthreevariables:
investmentasashareofincome,therateofgrowthofthelaborforce,andtherateofgrowthofexports(timesexportsasashareofincome).Thecoefficientonthelastvariableishighlysignificantstatistically.Similarly,Edwards(1993,pp.9-11)regressestherateofgrowthoftotalfactorproductivityontwomeasuresofopenness--totaltradeasapercentofGDPandtotaltariffrevenueasapercentoftrade--alongwithsomeothervariables,andfindsthat"ineveryregressiontheproxiesfortradedistortionsandopennessarehighlysignificant."
TheProblemofSimultaneityBetweenTradeandGrowth
Simultaneityisalwaysaconcernhowever.Rodrik(1994b,p.2),forexample,arguesthatthestandardviewis"quitemisleadingontheimportanceitattachestotheroleofexport-orientationinthegrowthperformance.Italsohasbackwardthecausalrelationshipbetweenexports,ontheonehand,andinvestmentandgrowthontheother."ThemechanismofreversecausalitythatRodrikhasinmindrunsasfollows:
anexogenousincreaseininvestmentinadevelopingcountrywithacomparativedisadvantageinproducingcapitalgoods,suchasKorea,willnecessitateanincreaseinimportsofsuchgoods(andinturnanincreaseinexportstopayfortheimports).<7>Similarly,BradfordandChakwin(1993)arguethatcausalityrunsfrominvestmenttogrowthandexports,ratherthantheotherwayaround.Helpman(1988,p.6)asks"Doesgrowthdrivetrade,oristhereareverselinkfromtradetogrowth?
"Harrison(1995,9.26)concludesthat"existingliteratureisstillunresolvedontheissueofcausality."
Quiteafewstoriesofreversecausalityarepossible.WhentheequationfeaturesaregressionofGDPagainstexports(ortheratesofchangethereof),thesimultaneityproblemisclear:
acorrelationmayemergesimplybecauseexportsareacomponentofGDP,ratherthanbecauseofanyextracontributionthattrademakestogrowth.Inthecaseofimports,trademightrisewithincomebecauseforeigngoodsaresuperiorgoodsinconsumption.Manystudieshavesoughttoidentifysomedirectmeasuresoftradepolicy,hopingthattheyareexogenous.<8>But,asidefromdifficultiesinmeasuringtradepolicies,whicharetypicallyseriousenough,afundamentalconceptualproblemofsimultaneityremains(e.g.,Sala-i-Martin,1991).Whatiffree-markettradepoliciesarenomoreimportanttogrowththanfree-marketdomesticpolicies,buttendtobecorrelatedwiththem?
Thenopennesswillbeobservedtobecorrelatedwithgrowth,eventhoughtradedoesnotcausegrowth.Afinalpossiblemechanismisapatternwherebypoorcountriestendtodependfiscallyontariffrevenue,andtoreducetariffsastheybecomemoredeveloped.
Anumberofstudieshavetangledwiththechallengeposedbysimultaneity.JungandMarshall(1985),HutchisonandSingh(1987,1992),andBradfordandChakwin(1993)applyGranger-causalityteststotheproblem.Esfahani(1991)attemptsasimultaneousequationapproach.Assoofteninmacro-econometrics,however,thesimultaneityproblemhasremainedlargelyintractable.
Whatisneededaregoodinstrumentalvariables,whicharetrulyexogenous,andyetarehighlycorrelatedwithtrade.Thispaperofferstestswithsuchinstruments:
tradesharesaspredictedbythegravitymodel.Thegravitymodelofbilateraltrade,initsmostbasicform,saysthattradebetweencountryiandcountryjisproportionaltotheproductofGDPiandGDPj,andinverselyrelatedtothedistancebetweenthem,byanalogytoNewton'stheoryofgravitationalattractionbetweentwomasses.Otherexplanatoryvariablesoftenaddedincludepopulations(orpercapitaGDPs),landareas,anddummyvariablesrepresentinglandlockedness,commonborders,commonlanguages,andcommonmembershipinregionaltradingarrangements.Whilethegravitymodelhaslongbeenanuglyducklingofinternationaleconomics--obscureandallegedlylackingtheoreticalfoundations--ithasrecentlyenjoyedaswan-likerevival.Thereareatleastthreereasonsforthatrevival:
itsempiricalsuccessatpredictingbilateraltradeflows,improvedtheoreticalfoundationsarisingfrommoderntheoriesoftradebasedonimperfectsubstitutes,andanewinterestamongeconomistsingeographyandtradethatseekstotreatcountriesorregionsasphysicallyexistingatparticularlocationsinspaceratherthanasdisembodiedconstructs.<9>
Suchvariablesasdistances,populations,commonborders,andcommonlanguagesareasclosetoexogenousaswegetineconomics.Fromtheviewpointofasmallindividualcountry,theGDPsoftradingpartnersareexogenousaswell.<10>Yetthesevariablesarehighlycorrelatedwithtrade.Thustheymakegoodinstrumentalvariables.Anintuitivewaytoimplementtheideaistousethevaluespredictedbythegravitymodeltoinstrumentforthetradevariableinthegrowthequation.Iftradestillappearstobeasignificantdeterminantofgrowthwiththiscorrection(takingcare,ofcourse,tousetherightstandarderrors),thenwecanconcludethattheeffectiscausalandnotspurious.
Inthelattercase,wemightalsobeabletogoonandsaysomethingparticularlyinterestingfortheEastAsiancountries:
totheextentthatthereisaSolowresidualinthegr
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