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How Trade Policy Affects Technology Adoption and Productivity

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Author Info
Herrendorf, Berthold
Teixeira, Arilton

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Abstract

How does trade policy a affect technology adoption, total factor productivity (TFP henceforth), and per capita income? To study this question we construct a dynamic general equilibrium model of a small open economy in which a coalition of skilled workers chooses the technology. We obtain three results. First, under free trade and under a tariff the best technology is used and TFP and per capita income are as large as is possible. Second, under a quota the best technology may or may not be used; in both cases per capita income and TFP are smaller than under free trade and a tariff. Third, average growth rates are the same across all three trade policy regimes but abandoning a quota leads to a short–term increase in growth rates.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3486.

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Date of creation: Aug 2002
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Handle: RePEc:cpr:ceprdp:3486

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Keywords: coalition quota tariff technology adoption total factor productivity

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Find related papers by JEL classification:
E00 - Macroeconomics and Monetary Economics - - General - - - General
E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Berthold Herrendorf & Arilton Teixeira, 2004. "Monopoly rights can reduce income big time," Macroeconomics 0404023, EconWPA. [Downloadable!]
    Other versions:
  2. Herrendorf, Berthold & Teixeira, Arilton, 2004. "Monopoly rights can reduce income big time," Research Discussion Papers 7/2004, Bank of Finland. [Downloadable!]
  3. Herrendorf, Berthold & Teixeira, Arilton, 2003. "Monopoly Rights can Reduce Income Big Time," CEPR Discussion Papers 3854, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Berthold Herrendorf & Arilton Teixeira, . "Barriers to Entry and Development," Working Papers 2167726, Department of Economics, W. P. Carey School of Business, Arizona State University. [Downloadable!]
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