Thursday, December 16, 2004
Tweet[IWS] IADB: OPEN TRADE & VULNERABILITY OF COUNTRIES study [online December 2004]
IWS Documented News Service
_______________________________
Institute for Workplace Studies Professor Samuel B. Bacharach
School of Industrial & Labor Relations Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor Stuart Basefsky
New York, NY 10016 Director, IWS News Bureau
________________________________________________________________________
Inter-American Development Bank (IADB)
Does Openness to Trade Make Countries More Vulnerable to Sudden Stops, or Less? Using Gravity to Establish Causality+
http://www.iadb.org/res/publications/pubfiles/pubS-262.pdf
[full-text, 49 pages]
Eduardo A. Cavalloi and Jeffrey A. Frankelii
John F. Kennedy School of Government
Harvard University
September 23, rev November, 2004
Abstract
Openness to trade is one factor that has been identified as determining whether a country is
prone to sudden stops in capital inflow, currency crashes, or severe recessions. Some
believe that openness raises vulnerability to foreign shocks, while others believe that it
makes adjustment to crises less painful. Several authors have offered empirical evidence
that having a large tradable sector reduces the contraction necessary to adjust to a given
cut-off in funding. This would help explain lower vulnerability to crises in Asia than in
Latin America. Such studies may, however, be subject to the problem that trade is
endogenous. We use the gravity instrument for trade openness, which is constructed from
geographical determinants of bilateral trade. We find that openness indeed makes countries
less vulnerable, both to severe sudden stops and currency crashes, and that the relationship
is even stronger when correcting for the endogeneity of trade.
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky *
Director, IWS News Bureau *
Institute for Workplace Studies *
Cornell/ILR School *
16 E. 34th Street, 4th Floor *
New York, NY 10016 *
*
Telephone: (607) 255-2703 *
Fax: (607) 255-9641 *
E-mail: smb6@cornell.edu *
****************************************
_______________________________
Institute for Workplace Studies
School of Industrial & Labor Relations
Cornell University
16 East 34th Street, 4th floor
New York, NY 10016
________________________________________________________________________
Inter-American Development Bank (IADB)
Does Openness to Trade Make Countries More Vulnerable to Sudden Stops, or Less? Using Gravity to Establish Causality+
http://www.iadb.org/res/publications/pubfiles/pubS-262.pdf
[full-text, 49 pages]
Eduardo A. Cavalloi and Jeffrey A. Frankelii
John F. Kennedy School of Government
Harvard University
September 23, rev November, 2004
Abstract
Openness to trade is one factor that has been identified as determining whether a country is
prone to sudden stops in capital inflow, currency crashes, or severe recessions. Some
believe that openness raises vulnerability to foreign shocks, while others believe that it
makes adjustment to crises less painful. Several authors have offered empirical evidence
that having a large tradable sector reduces the contraction necessary to adjust to a given
cut-off in funding. This would help explain lower vulnerability to crises in Asia than in
Latin America. Such studies may, however, be subject to the problem that trade is
endogenous. We use the gravity instrument for trade openness, which is constructed from
geographical determinants of bilateral trade. We find that openness indeed makes countries
less vulnerable, both to severe sudden stops and currency crashes, and that the relationship
is even stronger when correcting for the endogeneity of trade.
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 4:38 PM
