Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Structural Change and Global Trade
Services, which are less traded than goods, rose from 50 percent of world expenditure in 1970 to 80 percent in 2015. Such structural change restrained "openness"—the ratio of world trade to world GDP—over this period. We quantify this with a general equilibrium trade model featuring non-homothetic preferences and input-output linkages. Openness would have been 70 percent in 2015, 23 percentage points higher than the data, if expenditure patterns were unchanged from 1970. Structural change is critical for estimating the dynamics of trade barriers and welfare gains from trade. Ongoing structural change implies declining openness, even absent rising protectionism.
Cite this item
Logan T. Lewis & Ryan Monarch & Michael J. Sposi & Jing Zhang, Structural Change and Global Trade, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 1225, 10 Apr 2018.
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
Keywords: Globalization ; Structural change ; International trade
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