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Inward‐looking policies, finite change, and employment: The capital reallocation effect

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  • Sugata Marjit
  • Kausik Gupta

Abstract

It is well recognized that there emerged a trend of inward‐looking trade policies even before the COVID pandemic crippled the world. These were reflected in both BREXIT and US‐China trade conflicts. As countries become inward‐oriented, usually local prices start rising. With this backdrop, this paper explores how rising local prices are likely to affect employment in the short and long runs when we accommodate for the finite change in a general equilibrium structure whereby sectors not only contract but might also close down altogether due to the capital reallocation effect following a price incentive.

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  • Sugata Marjit & Kausik Gupta, 2023. "Inward‐looking policies, finite change, and employment: The capital reallocation effect," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 62-76, March.
    • Handle: RePEc:bla:ijethy:v:19:y:2023:i:1:p:62-76
    DOI: 10.1111/ijet.12335
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    References listed on IDEAS

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