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The Fundamental Determinants of the Terms of Trade Reconsidered: Long-run and Long-period Equilibrium

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  • Darity, William A, Jr

Abstract

Ronald Findlay's analysis of the long-run equilibrium (uniform international growth rates) determinants of the terms of trade, in the context of North-South models of trade and growth, is reconsidered when the North is a Keynesian and a Kaleckian economy. Also examined are the determinants of the terms of trade in long-period equilibrium (uniform profit rates), so that the consequences of capital mobility are accounted for. Two surprising results are noted: first, the long-run terms of trade when the North is a Kaleckian economy will be independent of the North's markup and, second, in the long-period it is theoretically possible for the North to raise its markup, but experience a deterioration in its own terms of trade. Copyright 1990 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 80 (1990)
Issue (Month): 4 (September)
Pages: 816-27

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Handle: RePEc:aea:aecrev:v:80:y:1990:i:4:p:816-27

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Cited by:
  1. Konstantin M. Wacker, 2011. "Do multinationals beat down developing countries' export prices? The impact of FDI on net barter terms of trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 211, Ibero-America Institute for Economic Research.
  2. Mainwaring, Lynn, 1998. "Transfers in a North-South Growth Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(5), pages 592-603, November.
  3. Hiroaki Sasaki, 2008. "North-South Asymmetry in Returns to Scale, Uneven Development, and the Population Puzzle," TERG Discussion Papers, Graduate School of Economics and Management, Tohoku University 238, Graduate School of Economics and Management, Tohoku University.
  4. José Antonio Ocampo & María Angela Parra, 2004. "The commodity terms of trade and their strategic implications for development," International Trade, EconWPA 0403001, EconWPA.
  5. Blecker, Robert A., 1996. "The new economic integration: Structuralist models of North-South trade and investment liberalization," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 7(3), pages 321-345, September.
  6. Wacker, Konstantin M. & Großkurth, Philipp & Lakemann, Tabea, 2014. "Terms of Trade, Foreign Direct Investment, and Development: A Case of Intra-Asian “Kicking Away the Ladder”?," Working Papers on Regional Economic Integration 122, Asian Development Bank.
  7. Bloch, Harry & Sapsford, David, 1997. "Some estimates of Prebisch and Singer effects on the terms of trade between primary producers and manufacturers," World Development, Elsevier, vol. 25(11), pages 1873-1884, November.
  8. Bilge Erten, 2010. "Industrial Upgrading and Export Diversification: A Comparative Analysis of Economic Policies in Turkey and Malaysia," Working Papers id:2778, eSocialSciences.
  9. Omar S. Dahi & Firat Demir, 2013. "Preferential trade agreements and manufactured goods exports: does it matter whom you PTA with?," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 45(34), pages 4754-4772, December.
  10. Sérgio Kannebley Júnior & Amaury Patrick Gremaud & Ricardo de Almeida Rennó, 2001. "A Tendência Secular dos Termos de Troca Brasileiros Revisitida - 1850 a 2000," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Gr 018, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  11. Araujo, Ricardo, 2013. "Assessing the Dynamics of Terms of Trade in a Model of Cumulative Causation and Structural Change," MPRA Paper 46049, University Library of Munich, Germany.

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