Trade and growth in a two-country model with home production and uneven technological spillovers
AbstractWe develop a two-country growth model distinguishing between a market sector producing services that can also be home-produced and a market sector producing goods without home-produced substitutes. The former is a technologically “stagnant” sector, while the latter is subject to learning by doing and technological spillovers. This distinction coincides in the model with the distinction between the sector producing non tradables and the sector producing internationally tradable goods. We study how differentials in labor tax rates across countries, which determine differences in the allocation of households’ time between market activities and home activities, influence also the mix of tradable and non-tradable goods that characterizes the market output of each country, thus affecting their bilateral trade balance and growth rates.
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Bibliographic InfoPaper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2009-13.
Date of creation: 22 Jun 2009
Date of revision:
Market time; employment rate; non-tradable goods; two-country model; endogenous growth;
Other versions of this item:
- Luigi Bonatti & Giulia Felice, 2010. "Trade And Growth In A Two-Country Model With Home Production And Uneven Technological Spillovers," Manchester School, University of Manchester, vol. 78(5), pages 484-509, 09.
- F10 - International Economics - - Trade - - - General
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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