Trade agreements, bargaining and economic growth
AbstractRebelo's two-sector endogenous growth model is embedded within a two-country international trade framework. The two countries bargain over a trade agreement that specifies: (i) the size of the foreign aid that the richer country gives to the poorer one; (ii) the terms of the international trade that takes place after the aid is given. Foreign aid is given not because of generosity, but because it improves the capital allocation across the world and thus raises total world production. This world production surplus enables the rich country to raise its equilibrium consumption and welfare beyond their no-aid levels. To ensure it, the rich country uses a trade agreement to condition the aid on favorable terms of trade.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 33 (2011)
Issue (Month): 1 (March)
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Web page: http://www.elsevier.com/locate/inca/622617
International trade Aid Balanced growth;
Other versions of this item:
- Maoz, Yishay David & Peled, Dan & Sarid, Assaf, . "Trade Agreements, Bargaining and Economic Growth," Working Papers WP2010/2, University of Haifa, Department of Economics, revised 30 May 2010.
- Maoz, Yishay & Peled, Dan & Sarid, Assaf, 2009. "Trade Agreements, Bargaining and Economic Growth," MPRA Paper 17064, University Library of Munich, Germany.
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- P45 - Economic Systems - - Other Economic Systems - - - International Linkages
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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