Huan Zhao (Jinhe Center for Economic Research, Xi'an Jiaotong University)
Abstract
This paper tries to resolve the paradox raised by Corden and Findlay (1975). In this paper, it is assumed that Manufacture sector has scale economies. Both factor prices and product prices can adjust in a general equilibrium system. In a closed economy, this paper concludes that, with the expansion of capital stock both the unemployment rate and the absolute amount of unemployment will decrease. In an open economy, this paper sets up an asymmetric model, of which only one region has fixed wage rate. It will help us to investigate how the trading cost would affect the unemployment and output of the region, which may give some helpful policy implications.
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Publisher Info
Paper provided by EconWPA in its series International Trade with number
0511004.
Find related papers by JEL classification: F1 - International Economics - - Trade F2 - International Economics - - International Factor Movements and International Business
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