Date of this Version
11-2010
Document Type
Working Paper
Abstract
Many 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.
Included in
Business Administration, Management, and Operations Commons, Finance and Financial Management Commons, International Business Commons
Publication Details
Falvey, R., Foster, N. & Greenaway, D. (2010). Trade liberalisation, economic crises and growth
Working Paper Series; No. 44, November 2010.
Copyright © Rod Falvey, Neil Foster & David Greenaway and The Globalisation and Development Centre, Bond University, 2010.