Growing through trade: the role of foreign growth and domestic tariffs

• Álvarez-Albelo, Carmen D. ^[1] ; Manresa, Antonio ^[2] ; Pigem i Vigo, Mònica ^[2]
  1. [1] Universidad de La Laguna

     Universidad de La Laguna

     San Cristóbal de La Laguna, España

     
  2. [2] Universitat de Barcelona

     Universitat de Barcelona

     Barcelona, España

     
• Localización: Documentos de trabajo ( XREAP ), Nº. 4, 2015
• Idioma: inglés
• Enlaces
  • Texto completo  1    2  
• Resumen

  • This paper studies the role of trading partner' growth and a domestic import tariff in the possibility of growing through trade. To this purpose, a Ricardian model is developed in which a backward economy seeks to increase its long-run growth rate simply by trading with a faster growing partner. It is found that domestic growth may be either negatively affected or unaffected by a domestic import tariff, while it is always positively impacted by foreign growth. Furthermore, convergence in growth rate can emerge both with an import tariff and under free trade. Ours results are consistent with the empirical evidence.