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Trade Liberalization and Investment in Foreign Capital Goods : A Look at the Intensive Margin (Английский)

We evaluate the impact of trade liberalization on the intensive margin of the firm’s investment in foreign capital goods. To do so, we use Indian firm-level panel data from a period of a large-scale trade liberalization (1989-1997) to estimate an investment equation using the system-GMM estimator. Importantly, we control separately for the tariffs on capital goods, intermediate inputs, and final goods, which allows us to estimate the price elasticity...
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