Short-run and Long-run Welfare Implications of Free Trade
AbstractThe author considers a two-factor (capital and labor), two-good (consumption and investment goods), one-country, overlapping-generations model. For the case in which the closed economy follows an efficient path, the author proves, that if trade lowers (raises) the relative price of the capital-intensive good, the current old people, who only own capital, lose (gain) from the opening of the economy, while all subsequent generations, whose only endowment is labor, benefit (lose) from it. It is also shown that the country gains from trade in the sense that the generations made better off by trade can compensate those that lose from the opening of the economy.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 24 (1991)
Issue (Month): 1 (February)
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- Gokcekus, Omer & Tower, Edward, 1996.
"Does Trade Liberalization Benefit Young and Old Alike?,"
96-35, Duke University, Department of Economics.
- Gokcekus, Omer & Tower, Edward, 1998. "Does Trade Liberalization Benefit Young and Old Alike?," Review of International Economics, Wiley Blackwell, vol. 6(1), pages 50-58, February.
- Cremers, Emily T., 2005. "Intergenerational Welfare And Trade," Macroeconomic Dynamics, Cambridge University Press, vol. 9(05), pages 585-611, November.
- Claustre Bajona & Timothy J. Kehoe, 2006.
"Demographics in dynamic Heckscher-Ohlin models: overlapping generations versus infinitely lived consumers,"
377, Federal Reserve Bank of Minneapolis.
- Claustre Bajona & Timothy J. Kehoe, 2006. "Demographics in Dynamic Heckscher-Ohlin Models: Overlapping Generations Versus Infinitely Lived Consumers," NBER Working Papers 12566, National Bureau of Economic Research, Inc.
- Claustre Bajona, 2010. "Demographics in Dynamic Heckscher-Ohlin Models: Overlapping Generations versus Infinitely Lived Consumers," 2010 Meeting Papers 1172, Society for Economic Dynamics.
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