Saturday, August 23, 2008

Freer trade does cause benefits

The economic researchers are very careful. They don't jump to conclusions. Antoni Estevadeordal and Alan M. Taylor of UC Davis did the research with all the special considerations. National Bureau of Economic Research We find evidence that a specific treatment, liberalizing tariffs on imported capital and intermediate goods, did lead to faster GDP growth, and by a margin consistent with theory (about 1 percentage point per annum). Endogeneity problems are considered and other observations are consistent with the proposed mechanism: changes to other tariffs, e.g. on consumption goods, though collinear with general tariffs reforms, are more weakly correlated with growth outcomes; and the treatment and control groups display different behavior of investment prices and quantities, and capital flows.

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