On the Impact of CETA: Trade and Investment
17 November 2016 4:00 pm
Mario Larch, University of Bayreuth
wiiw, Rahlgasse 3, 1060 Vienna, lecture hall (ground floor)
We develop a structural framework that accounts for and decomposes the relationships between trade, growth (physical capital accumulation), and foreign direct investment (FDI). As a byproduct, our theory delivers an intuitive FDI-gravity system that translates into a familiar estimating gravity equation. The FDI-gravity estimates are similar to the corresponding trade indexes, however, we also document some notable differences between them. A counterfactual experiment simulating the effects of trade liberalization between Canada and the European Union demonstrates the effectiveness and the capabilities of our framework.
Keywords: Trade, FDI, Growth, Trade Liberalization, Capital Accumulation
JEL classification: F10, F43, O40