THE COST OF TRADE DISRUPTIONS AT DIFFERENT STAGES OF DEVELOPMENT Journal Articles uri icon

  •  
  • Overview
  •  
  • Research
  •  
  • Identity
  •  
  • View All
  •  

abstract

  • AbstractWe study trade disruptions at different stages of development in a two‐country, three‐sector model of Spain and United Kingdom from 1850 to 2000. The impact of trade disruptions depends on trade openness and the productivity gap between countries. A trade collapse today (more openness, less gap) comparable to the Inter‐War Trade Collapse (IWTC) decreases the capital stock threefold (12% instead of 4%) and lifetime consumption fourfold (1.58% instead of 0.37%). Capital accumulation amplifies the cost of trade disruptions. The IWTC promoted Spanish industrialization, while the opposite would be true today.

publication date

  • January 1, 2024