International trade and investment.

• Position: National Bureau of Economic Research meeting

The NBER's Program on International Trade and Investment held its spring meeting in Cambridge on April 23 and 24. Program Director Robert C. Feenstra, NBER and University of California, Davis, chose these papers for discussion:

Francisco Rodriguez, University of Maryland, and Dani Rodrik, NBER and Harvard University, "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence" (NBER Working Paper No. 7081)

Daniel Trefler, NBER and University of Toronto, and Huiwen Lai, University of Toronto, "Competing Models of Monopolistic Competition: An Econometric Antitrust Case"

Donald R. Davis, NBER and Harvard University, and David E. Weinstein, NBER and University of Michigan, "An Account of Global Factor Trade" (NBER Working Paper No. 6785)

Wolfgang Keller, NBER and University of Texas, "Geographic Localization of International Technology Diffusion"

Lee G. Branstetter, NBER and University of California, Davis, "Is FDI a Channel of R and D Spillovers? More Evidence from Japan's FDI in the United States"

Andrew B. Bernard, NBER and Yale University; Jonathan Eaton and Samuel Kortum, NBER and Boston University; and J. Bradford Jensen, Carnegie-Mellon University, "Plants and Productivity in International Trade: A Ricardian Reconciliation"

James E. Anderson, NBER and Boston College, and Douglas Marcouiller, Boston College, "Trade. Insecurity, and Home Bias: An Empirical Investigation" (NBER Working Paper No. 7000)

Do countries with lower policy-induced barriers to international trade grow faster than other similar countries? Rodriguez and Rodrik point out that, in many cases, the indicators of "openness" used by researchers are poor measures of trade barriers or are highly correlated with other sources of bad economic performance. In certain other cases, the methods used to ascertain the link between trade policy and growth have serious shortcomings. Their analysis of earlier work uncovers little evidence that open trade policies - that is, lower tariff and nontariff barriers to trade - are associated significantly with economic growth.

Trefler and Lai model the general equilibrium effects of product prices using the Consumer Expenditure Survey monopolistic competition model. They then use the model to estimate the compensating variation associated with trade liberalization. They find that the gains from liberalization are much larger than those usually reported. However, they determine that the good fit of the model is driven...