Trade liberalisation, economic crises and growthGlobalisation and Development Centre
Date of this Version11-1-2010
Document TypeWorking Paper
AbstractMany economic reforms are undertaken at a time of economic crisis. But is this a good time for a country to undertake trade reform? In this paper we investigate whether an economic crisis at the time of trade liberalisation affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators commonly used in the literature, to identify the relevant “crisis values” and to estimate the differential postliberalisation growth effects in the crisis and non-crisis regimes. We find that the magnitude of the acceleration in postliberalisation growth depends on the characteristics of the crisis. Although trade liberalisation in both crisis and non-crisis periods raises subsequent growth, an internal crisis implies a lower acceleration and an external crisis a higher acceleration relative to the non-crisis regime.
Citation InformationRodney Falvey, Neil Foster and David Greenaway. "Trade liberalisation, economic crises and growth" (2010)
Available at: http://works.bepress.com/rodney_falvey/13/