Once Again, is Openness Good for Growth?

30 Pages Posted: 15 Feb 2006

See all articles by Ha Yan Lee

Ha Yan Lee

Massachusetts Institute of Technology (MIT) - Department of Economics

Roberto Rigobon

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Luca A. Ricci

International Monetary Fund (IMF) - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: July 2004

Abstract

Rodriguez and Rodrik (2000) argue that the relation between openness and growth is still an open question. One of the main problems in the assessment of the effect is the endogeneity of the relation. In order to address this issue, this paper applies the identification through heteroskedasticity methodology to estimate the effect of openness on growth while properly controlling for the effect of growth on openness. The results suggest that openness would have a positive effect on growth, although small. This result stands, despite the equally robust effect from growth to openness.

Keywords: Trade openness, economic growth, endogeneity, identification through heteroskedasticity

JEL Classification: F10, F43, O40, C33

Suggested Citation

Lee, Ha Yan and Rigobon, Roberto and Ricci, Luca Antonio, Once Again, is Openness Good for Growth? (July 2004). IMF Working Paper No. 04/135, Available at SSRN: https://ssrn.com/abstract=878960

Ha Yan Lee (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Roberto Rigobon

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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National Bureau of Economic Research (NBER) ( email )

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Luca Antonio Ricci

International Monetary Fund (IMF) - Research Department ( email )

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