Transfers, Non-Traded Goods, and Unemployment: An Analysis of the Keynes - Ohlin Debate

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Transfers, Non-Traded Goods, and Unemployment: An Analysis of the Keynes - Ohlin Debate

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Steven Brakman ()
Charles van Marrewijk

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Charles Van Marrewijk

Abstract

In the famous debate between Keynes and Ohlin on the transfer problem, the interaction between non-traded goods and unemployment complicates the analysis considerably. We analyze these issues using four different models to conclude that Keynes’s concern regarding the large burden imposed on Germany was justified. Simultaneously, we show that Ohlin’s presumption that a transfer does not affect the donor’s terms-of-trade either favourably or unfavourably was also justified. Moreover, Ohlin was also right in asserting that a transfer tends to lower the price of non-traded goods for the donor and raise them for the recipient.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1588.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1588

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B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
F00 - International Economics - - General - - - General
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-12-09 (All new papers)

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