On the Impact of CETA: Trade and Investment

17  November 2016    4:00 pm CET

Mario Larch, University of Bayreuth

In cooperation with:


wiiw, Rahlgasse 3, 1060 Vienna, lecture hall (ground floor)


Mario Larch

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