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From stationary state to endogenous growth: international trade in the mathematical formulation of the Ricardian system

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  • Neri Salvadori
  • Rodolfo Signorino

Abstract

In his 1814–15 correspondence with Malthus and in his Essay on Profits, Ricardo championed the free importation of wage goods as a highly effective growth-enhancing policy. In order to capture this aspect in the mathematical formulation of the Ricardian system first introduced by Pasinetti in 1960 in the context of a closed economy, we produce a variant of that model where the economy is a small open one. We show that this economy is characterised by endogenous growth since the growth rate is bounded from below and we locate two thresholds concerning the allocation of labour among the two sectors of the economy and the pattern of international trade.

Suggested Citation

  • Neri Salvadori & Rodolfo Signorino, 2016. "From stationary state to endogenous growth: international trade in the mathematical formulation of the Ricardian system," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(3), pages 895-912.
    • Handle: RePEc:oup:cambje:v:40:y:2016:i:3:p:895-912.
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    File URL: http://hdl.handle.net/10.1093/cje/bev018
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    Cited by:

    1. Freni, Giuseppe & Salvadori, Neri & Signorino, Rodolfo, 2019. "Structural change in a Ricardian world economy: The role of extensive rent," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 277-282.

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