I study the implications of endogenous productivity choices ("innovation") on the effects of trade liberalization. I find that a model with innovation generates an elasticity of trade volumes to tariff reductions that is fifty percent larger than models without innovation, and consistent in...

We propose a tractable algorithm to solve stochastic growth models of structural change. Under general conditions, structural change implies an unbalanced growth path. This property prevents the use of local solution techniques when uncertainty is introduced, and requires the adoption of global...