IDEAS home Printed from https://ideas.repec.org/a/spr/etbull/v7y2019i2d10.1007_s40505-018-0158-3.html
   My bibliography  Save this article

Transfer paradox in a stable equilibrium

Author

Listed:
  • Ram Sewak Dubey

    (Montclair State University)

  • Minwook Kang

    (Nanyang Technological University)

Abstract

The transfer paradox describes the situation in which transfers of initial endowments within competitive market make the donor better off and (or) the recipient worse off. Advantageous redistribution, strong transfer paradox, and Chichilnisky paradox are the three cases of the transfer paradox in a stable equilibrium, wherein each case produces a different welfare outcome. This paper shows that the three paradoxes are concretely related by applying Kaldor welfare measure.

Suggested Citation

  • Ram Sewak Dubey & Minwook Kang, 2019. "Transfer paradox in a stable equilibrium," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 259-269, December.
    • Handle: RePEc:spr:etbull:v:7:y:2019:i:2:d:10.1007_s40505-018-0158-3
    DOI: 10.1007/s40505-018-0158-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40505-018-0158-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40505-018-0158-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kang, Minwook, 2014. "Nonconnectedness Of The Set Of Bankruptcy-Free Money Equilibria In The Static Economy: A Constructive Example," Macroeconomic Dynamics, Cambridge University Press, vol. 18(7), pages 1539-1546, October.
    2. Bhagwati, Jagdish N & Brecher, Richard A & Hatta, Tatsuo, 1983. "The Generalized Theory of Transfers and Welfare: Bilateral Transfers in a Multilateral World," American Economic Review, American Economic Association, vol. 73(4), pages 606-618, September.
    3. Philip R. Lane & Gian Maria Milesi-Ferretti, 2004. "The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 841-857, November.
    4. Geanakoplos, John & Heal, Geoffrey, 1983. "A geometric explanation of the transfer paradox in a stable economy," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 223-236.
    5. Chichilnisky, Graciela, 1980. "Basic goods, the effects of commodity transfers and the international economic order," Journal of Development Economics, Elsevier, vol. 7(4), pages 505-519, December.
    6. Chichilnisky, Graciela, 1983. "The transfer problem with three agents once again : Characterization, uniqueness and stability," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 237-247.
    7. Kang, Minwook & Ye, Lei Sandy, 2016. "Advantageous redistribution with three smooth CES utility functions," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 171-180.
    8. Yano, Makoto, 1983. "Welfare aspects of the transfer problem," Journal of International Economics, Elsevier, vol. 15(3-4), pages 277-289, November.
    9. Demuynck, Thomas & Rock, Bram De & Ginsburgh, Victor, 2016. "The transfer paradox in welfare space," Journal of Mathematical Economics, Elsevier, vol. 62(C), pages 1-4.
    10. Gale, David, 1974. "Exchange equilibrium and coalitions : An example," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 63-66, March.
    11. Leonard, Daniel & Manning, Richard, 1983. "Advantageous reallocations: A constructive example," Journal of International Economics, Elsevier, vol. 15(3-4), pages 291-295, November.
    12. Jeffrey B. Nugent & Makoto Yano, 1999. "Aid, Nontraded Goods, and the Transfer Paradox in Small Countries," American Economic Review, American Economic Association, vol. 89(3), pages 431-449, June.
    13. Aditya Goenka & Stefano Matta, 2008. "Manipulation of endowments and sunspot equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 36(2), pages 267-282, August.
    14. Donsimoni, M. -P. & Polemarchakis, H. M., 1994. "Redistribution and welfare," Journal of Mathematical Economics, Elsevier, vol. 23(3), pages 235-242, May.
    15. ,, 2014. "The transfer problem: A complete characterization," Theoretical Economics, Econometric Society, vol. 9(2), May.
    16. Majumdar, Mukul & Mitra, Tapan, 1985. "A result on the transfer problem in international trade theory," Journal of International Economics, Elsevier, vol. 19(1-2), pages 161-170, August.
    17. Devereux, Michael B. & Smith, Gregor W., 2007. "Transfer problem dynamics: Macroeconomics of the Franco-Prussian war indemnity," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2375-2398, November.
    18. Jones, Ronald W, 1970. "The Transfer Problem Revisited," Economica, London School of Economics and Political Science, vol. 37(146), pages 178-184, May.
    19. Balasko, Yves, 1978. "The Transfer Problem and the Theory of Regular Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 687-694, October.
    20. Postlewaite, Andrew & Webb, Michael, 1984. "The possibility of recipient-harming, donor-benefiting transfers with more than two countries," Journal of International Economics, Elsevier, vol. 16(3-4), pages 357-364, May.
    21. Kang, Minwook & Ye, Lei Sandy, 2014. "Coalition-enhancing fiscal policies in an open economy: A CES framework of Gale’s transfer paradox," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 141-147.
    22. Jagdish Bhagwati & Richard Brecher & Tatsuo Hatta, 1984. "The paradoxes of immiserizing growth and donor-enriching “recipient-immiserizing” transfers: A tale of two literatures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 120(2), pages 228-243, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kamei, Kenju, 2022. "Transfer paradox in a general equilibrium economy: An experimental investigation," Economics Letters, Elsevier, vol. 211(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kang, Minwook & Ye, Lei Sandy, 2016. "Advantageous redistribution with three smooth CES utility functions," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 171-180.
    2. Sergio Turner, 2006. "How much trade does the transfer paradox require? The threshold computed," Working Papers 2006-02, Brown University, Department of Economics.
    3. Demuynck, Thomas & Rock, Bram De & Ginsburgh, Victor, 2016. "The transfer paradox in welfare space," Journal of Mathematical Economics, Elsevier, vol. 62(C), pages 1-4.
    4. Minwook KANG, 2015. "A Concrete Example of the Transfer Problem with Multiple Equilibria," Economic Growth Centre Working Paper Series 1504, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    5. Hamid Beladi, 1990. "Unemployment and immiserizing transfer," Journal of Economics, Springer, vol. 52(3), pages 253-265, October.
    6. Kang, Minwook & Ye, Lei Sandy, 2014. "Coalition-enhancing fiscal policies in an open economy: A CES framework of Gale’s transfer paradox," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 141-147.
    7. Kamei, Kenju, 2022. "Transfer paradox in a general equilibrium economy: An experimental investigation," Economics Letters, Elsevier, vol. 211(C).
    8. Emily T. Cremers & Partha Sen, 2009. "Transfers, the terms of trade, and capital accumulation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1599-1616, November.
    9. Emily T. Cremers, 2008. "Transfers, the Terms of Trade and Capital Accumulation," DEGIT Conference Papers c013_018, DEGIT, Dynamics, Economic Growth, and International Trade.
    10. Vladimir Gligorov, 2016. "The Transfer and Adjustment Problems in the Balkans," wiiw Balkan Observatory Working Papers 125, The Vienna Institute for International Economic Studies, wiiw.
    11. Trionfetti, Federico, 2018. "Firm heterogeneity, comparative advantage and the transfer problem," European Economic Review, Elsevier, vol. 108(C), pages 246-258.
    12. Jagdish Bhagwati & Richard Brecher & Tatsuo Hatta, 1984. "The paradoxes of immiserizing growth and donor-enriching “recipient-immiserizing” transfers: A tale of two literatures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 120(2), pages 228-243, June.
    13. Kenju Kamei, 2020. "Transfer Paradox in a General Equilibrium Economy: a First Experimental Investigation," Working Papers 2020_03, Durham University Business School.
    14. Lynn Mainwaring, 1998. "Transfers in a North‐South Growth Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(5), pages 592-603, November.
    15. Akiko Suwa-Eisenmann & Thierry Verdier, 2007. "Aid and trade," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(3), pages 481-507, Autumn.
    16. Edward Tower & Yifan Victor Ye, 2016. "How Taxes And Real Wage Inflexibility Interact To Make Trade Deficits Addictive: The Tertiary And Quaternary Burdens Of A Transfer," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(02), pages 1-15, June.
    17. Ichiro Gombi & Shinsuke Ikeda, 2001. "Heterogeneous Habits and the Transfer Paradox," ISER Discussion Paper 0551, Institute of Social and Economic Research, Osaka University.
    18. Steven Brakman & Charles Van Marrewijk, 2007. "Transfers, Nontraded Goods, and Unemployment: An Analysis of the Keynes-Ohlin Debate," History of Political Economy, Duke University Press, vol. 39(1), pages 121-143, Spring.
    19. Martínez-Zarzoso Inmaculada & Klasen Stephan & Nowak-Lehmann D. Felicitas & Larch Mario, 2009. "Does German Development Aid Promote German Exports?," German Economic Review, De Gruyter, vol. 10(3), pages 317-338, August.
    20. Emily T. Cremers & Partha Sen, 2005. "Transfers and the Terms of Trade in an Overlapping Generations Model," Working papers 138, Centre for Development Economics, Delhi School of Economics.

    More about this item

    Keywords

    Advantageous redistribution; Chichilnisky Paradox; Strong Paradox;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:etbull:v:7:y:2019:i:2:d:10.1007_s40505-018-0158-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.