The Transfer Problem and the Intertemporal Terms of Trade
In this paper, the effects of a transfer on the intertemporal terms of trade are examined in the context of a simple two-country, two-period model. When intertemporal trade occurs because the two economies have different rates of time preference, a transfer improves the terms of trade of the paying country. Alternatively, when trade occurs owing to international differences in the endowments of goods over the two periods, the effect of a transfer depends on (1) the relationship between the interest rate and the rates of time preference of the two countries and (2) the relationship between their elasticities of intertemporal consumption substitution.
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Volume (Year): 31 (1998)
Issue (Month): 2 (May)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philip L. Brock, 1996. "International Transfers, the Relative Price on Non-Traded Goods, and the Current Account," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 163-180, February.
- O. Galor & H. M. Polemarchakis, 1987.
"Intertemporal Equilibrium and the Transfer Paradox,"
Review of Economic Studies,
Oxford University Press, vol. 54(1), pages 147-156.
- Galor, O. & Polemarchakis, H.M., 1984. "Intertemporal equilibrium and the transfor paradox," CORE Discussion Papers 1984014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).