Trade raises income: a precise and robust result |
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Authors: | Marta Noguer |
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Affiliation: | a Department of Economics, Columbia University, 1022 International Affairs Building, 420 West 118th Street, New York, NY 10027, USA b Department of Economics, New York University, 269 Mercer Street, 7th Floor, New York, NY 10003, USA |
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Abstract: | Does international trade promote income? Earlier studies could not provide conclusive evidence. This paper re-examines this question. Following previous work, we treat trade as endogenous and use geography to instrument for trade. We use a richer data set that allows us to estimate the impact of trade on income with much greater precision. We also show that geographical controls must enter the income equation to avoid bias. We find that countries that trade more reach higher levels of income. This result is remarkably robust to a wide array of geographical and institutional controls. |
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Keywords: | Trade Income Empirical Geography Gravity |
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