Dan Ben-David

Equalizing Exchange: Trade Liberalization and Income Convergence

How does movement toward freer trade affect income disparity among countries? This paper attempts to shed some light on the issue by examining episodes of major postwar trade hberalization within specified groups of countries. The findings suggest a strong link between the timing of trade reform and income convergence among countries.

Trade and convergence among countries

This paper examines the relationship between trade and income convergence by focusing on groups of countries comprising major trade partners. The majority of these groups exhibited significant convergence. Furthermore, a comparison of the trade-based groups with different, randomly selected, country groupings shows that the former were more likely to exhibit convergence than the latter. Finally, there is evidence that the magnitude of growth in trade is related to the degree of the income convergence among countries.

The great wars, the great crash, and steady state growth: Some new evidence about an old stylized fact

Abstract The ‘stylized fact’ that growth rates remain constant over the long run was a fundamental feature of postwar growth theoty. Using recently developed tests for structural change in univariate time series, we determine whether, and when, a break in growth rates exists for 16 countries. We find that most countries exhibited fairly steady growth for a period lasting several decades, terminated by a significant, and sudden, drop in GDP levels. Following the break, per capita output in most countries continued to grow at roughly double their prebreak rates for many decades, even after their original growth path had been surpassed.

Trade and the rate of income convergence

To the extent that trade policy affects trade flows between countries, the ramifications can be far-reaching from an economic growth perspective. This paper examines one aspect of these ramifications, namely the impact of changes in the extent of trade between countries on changes in the rate of reduction in the size of the income gap that exists between them. Export and import data are used as the criteria for determining bilateral trade between major trade partners, resulting in the creation of 127 pairs of countries on the basis of export data and 134 pairs on the basis of import data. An increase in trade between major trade partners - and, in particular, increased exports by poorer countries to their wealthier partners - is shown to be related to an increase in the rate of convergence between the countries.

Trade and the Neoclassical Growth Model

The model developed in this paper expands upon the traditional neoclassical exogenous growth model by facilitating a long-run growth analysis of the impact of openness to trade within a multi-country framework. Openness affects growth by impacting the extent of knowledge spillovers from abroad. This feature effectively converts the traditional closed-economy exogenous growth model into a multi-country, open-economy endogenous growth model. Nevertheless, the conditional convergence and identical growth predictions of the neoclassical model are preserved here with the extent of trade now playing a role in determining the relative heights of the countries’ parallel output paths.

Trade liberalization and income convergence: a comment

Abstract When examining the relationship between trade liberalization and income convergence across countries, it is important to distinguish between formal and actual periods of trade liberalization. Furthermore, the degree of liberalization and the extent of trade between the liberalizing countries are important factors that influence the link between liberalization and convergence. Evidence suggests that postwar trade reforms in which major trade partners substantially reduced barriers on trade with one another culminated in income convergence between the trade-liberalizing countries.

Ranking Israel's Economists

One of the more important measures of a scholar’s research impact is the number of times that the scholar’s work is cited by other researchers as a source of knowledge. This paper conducts a first of its kind examination on Israel’s academic economists and economics departments, ranking them according to the number of citations on their work. It also provides a vista into one of the primary reasons given by junior Israeli economists for an unparalleled brain drain from the country—discrepancies between research impact and promotion. The type of examination carried out in this paper can now be easily replicated in other fields and in other countries utilizing freely available citations data and compilation software that have been made readily accessible in recent years.

Evidence on the Contribution of Trade Reform Towards International Income Equalization

This paper provides some historical evidence on the impact of trade reform on income disparities between the liberalizing countries. The convergence test developed here involves joint estimation of augmented Dickey-Fuller type equations using seemingly unrelated regression (SUR) techniques. Monte Carlo simulations are used to calculate the critical values which are in turn used to determine the significance of convergence. We find that countries which embarked on extensive trade liberalization programs exhibited significant income convergence with one another while countries that did not liberalize trade showed no evidence of convergence.