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Trade Liberalization and Heterogeneous Time Preference across Countries: A Possibility of Trade Deficits with China

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Author Info

  • Taiji Harashima

    (University of Tsukuba & Cabinet Office of Japan)

Abstract

Strategies for trade liberalization in developing countries when time preference rates are heterogeneous across countries are examined in the context of endogenous growth. The paper concludes that the best strategy for a developing country with the higher rate of time preference is generally the strategy of free trade with wielding market power if the country is large enough to wield market power, because all the optimality conditions are satisfied and markets are not distorted. By this strategy, the country generally accumulates current account surpluses, which implies a possibility that China implicitly has taken this strategy.

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File URL: http://128.118.178.162/eps/it/papers/0505/0505015.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Trade with number 0505015.

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Length: 49 pages
Date of creation: 31 May 2005
Date of revision: 02 Jun 2005
Handle: RePEc:wpa:wuwpit:0505015

Note: Type of Document - pdf; pages: 49
Contact details of provider:
Web page: http://128.118.178.162

Related research

Keywords: Trade Liberalization; The rate of time preference; Heterogeneity; Trade deficits; China;

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Cited by:
  1. Taiji Harashima, 2005. "An Estimate of the Elasticity of Intertemporal Substitution in a Production Economy," Macroeconomics 0508030, EconWPA.
  2. Taiji Harashima, 2005. "The Pro-cyclical R&D Puzzle: Technology Shocks and Pro-cyclical R&D Expenditure," Macroeconomics 0507012, EconWPA, revised 12 Jul 2005.

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