Authors: George Verikios and Kevin Hanslow
Taking a commonly-used and commonly-available trade policy model as our starting point, we examine the long-run effects of large-scale structural change with and without international capital accumulation, mobility and ownership. We demonstrate the relative merits and limitations of different treatments of international capital accumulation, mobility and ownership. In doing so, we present a treatment of international capital accumulation, mobility and ownership that gives policy analysts an approach to analysing the effects of large-scale structural policies that is not too heavy in its theoretical and data demands. Our findings support the work of Baldwin (1992) and others who have demonstrated that ignoring capital accumulation, mobility and ownership underestimates net output and welfare effects of large-scale structural change.
JEL classification:C68, F15, F21.
Please cite the later published version in:
Global Economic Review, vol. 38, no. 3, 2009, pp. 229-50.
Keywords: computable general equilibrium models, capital accumulation, international capital mobility and ownership, structural change.
Working Paper Number G-179 can be downloaded in PDF format.
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