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On the General Impossibility of Persistent Unequal Exchange Free Trade Equilibria in the Pre-industrial World Economy

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  • Kaneko, Soh
  • Yoshihara, Naoki

Abstract

This paper analyzes the persistency of the unequal exchange of labor (UE) in international trade. An intertemporal model of a world economy is defined with a leisure preference and no discount factor. Every incompletely specialized free trade equilibrium is characterized as having non-persistent UE, which verifies the convergence of economies without relying on economic growth or diminishing returns to scale. In particular, it characterizes a sub-class of equilibria in which the sequence of real interest rates does not converge to zero, but UE tends to disappear while equivalently the distribution of capital assets tends to be equalized in the long run.

Suggested Citation

  • Kaneko, Soh & Yoshihara, Naoki, 2019. "On the General Impossibility of Persistent Unequal Exchange Free Trade Equilibria in the Pre-industrial World Economy," Discussion Paper Series 688, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hituec:688
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/29774/DP688.pdf
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    References listed on IDEAS

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    10. Naoki Yoshihara & Soh Kaneko, 2016. "On the Existence and Characterization of Unequal Exchange in the Free Trade Equilibrium," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 210-241, May.
    11. Naoki Yoshihara, 2017. "A Progress Report On Marxian Economic Theory: On The Controversies In Exploitation Theory Since Okishio (1963)," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1421-1448, December.
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    14. Galanis, Giorgos & Veneziani, Roberto & Yoshihara, Naoki, 2019. "The dynamics of inequalities and unequal exchange of labor in intertemporal linear economies," Journal of Economic Dynamics and Control, Elsevier, vol. 100(C), pages 29-46.
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    Cited by:

    1. Naoki Yoshihara, 2021. "On the labor theory of value as the basis for the analysis of economic inequality in the capitalist economy," Japanese Economy, Taylor & Francis Journals, vol. 47(2-3), pages 190-212, July.
    2. Weikai Chen & Naoki Yoshihara, 2019. "Persistent Exploitation with Intertemporal Reproducible Solution in Pre-industrial Economies," UMASS Amherst Economics Working Papers 2019-10, University of Massachusetts Amherst, Department of Economics.
    3. Cogliano, Jonathan F. & Kaneko, Soh & Veneziani, Roberto & Yoshihara, Naoki, 2020. "International Exploitation, Capital Export, and Unequal Exchange," Discussion Paper Series 718, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    Unequal exchange of labor; a world economy with a leisure preference; non-stationary relative prices of commodities;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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