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Federal Reserve Bank of Dallas
Globalization Institute Working Papers
Structural Change and Global Trade
Logan T. Lewis
Ryan Monarch
Michael J. Sposi
Jing Zhang
Abstract

Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. In a trade model featuring nonhomothetic preferences and input-output linkages, we find that such structural change has restrained the growth in world trade to GDP by 16 percentage points over this period. This magnitude is similar to how much declining trade costs have boosted openness. Moreover, structural change dampens the measured gains from trade by incorporating endogenous responses of expenditure shares to the trade regime. Ongoing structural change implies declining openness, even absent rising protectionism.


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Logan T. Lewis & Ryan Monarch & Michael J. Sposi & Jing Zhang, Structural Change and Global Trade, Federal Reserve Bank of Dallas, Globalization Institute Working Papers 333, 01 Jan 2018, revised 01 Apr 2018.
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Keywords: Globalization; structural change; international trade
DOI: 10.24149/gwp333r2
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