THE COST OF TRADE DISRUPTIONS AT DIFFERENT STAGES OF DEVELOPMENT

Juan Carlos Conesa; Matthew J. Delventhal; Pau S. Pujolas; Gajendran Raveendranathan

doi:10.1111/iere.12690

THE COST OF TRADE DISRUPTIONS AT DIFFERENT STAGES OF DEVELOPMENT

Juan Carlos Conesa
, Matthew J. Delventhal
, Pau S. Pujolas
, Gajendran Raveendranathan

Economics

Stony Brook University

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

We study trade disruptions at different stages of development in a two-country, three-sector model of Spain and United Kingdom from 1850 to 2000. The impact of trade disruptions depends on trade openness and the productivity gap between countries. A trade collapse today (more openness, less gap) comparable to the Inter-War Trade Collapse (IWTC) decreases the capital stock threefold (12% instead of 4%) and lifetime consumption fourfold (1.58% instead of 0.37%). Capital accumulation amplifies the cost of trade disruptions. The IWTC promoted Spanish industrialization, while the opposite would be true today.

Original language	English
Pages (from-to)	1133-1161
Number of pages	29
Journal	International Economic Review
Volume	65
Issue number	3
DOIs	https://doi.org/10.1111/iere.12690
State	Published - Aug 2024

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abstract = "We study trade disruptions at different stages of development in a two-country, three-sector model of Spain and United Kingdom from 1850 to 2000. The impact of trade disruptions depends on trade openness and the productivity gap between countries. A trade collapse today (more openness, less gap) comparable to the Inter-War Trade Collapse (IWTC) decreases the capital stock threefold (12\% instead of 4\%) and lifetime consumption fourfold (1.58\% instead of 0.37\%). Capital accumulation amplifies the cost of trade disruptions. The IWTC promoted Spanish industrialization, while the opposite would be true today.",

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THE COST OF TRADE DISRUPTIONS AT DIFFERENT STAGES OF DEVELOPMENT

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