02080cas a2200253 a 4500 AALejournalIMF018011 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484324851 1018-5941 BD-DhAAL BD-DhAAL Cerdeiro, Diego. Trade and Income in the Long Run : Are There Really Gains, and Are They Widely Shared? / Diego Cerdeiro, Andras Komaromi. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (36 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In the cross section of countries, there is a strong positive correlation between trade and income, and a negative relationship between trade and inequality. Does this reflect a causal relationship? We adopt the Frankel and Romer (1999) identification strategy, and exploit countries' exogenous geographic characteristics to estimate the causal effect of trade on income and inequality. Our cross-country estimates for trade's impact on real income are consistently positive and significant over time. At the same time, we do not find any statistical evidence that more trade increases aggregate measures of income inequality. Heeding previous concerns in the literature (e.g. Rodriguez and Rodrik, 2001; Rodrik, Subramanian and Trebbi, 2004), we carefully analyze the validity of our geography-based instrument, and confirm that the IV estimates for the impact of trade are not driven by other direct or indirect effects of geography through non-trade channels. Mode of access: Internet Komaromi, Andras. IMF Working Papers; Working Paper ; No. 2017/231 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/231/001.2017.issue-231-en.xml IMF e-Library