Trade Liberalization and Heterogeneous Time Preference across Countries: A Possibility of Trade Deficits with China
AbstractStrategies 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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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0505015.
Length: 49 pages
Date of creation: 31 May 2005
Date of revision: 02 Jun 2005
Note: Type of Document - pdf; pages: 49
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Trade Liberalization; The rate of time preference; Heterogeneity; Trade deficits; China;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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