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A Ricardian model of trade and growth with endogenous trade status

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  • Naito, Takumi

Abstract

We formulate a two-country, continuum-good Ricardian model of trade and endogenous growth with endogenous trade status. After establishing the existence, uniqueness, and global stability of a balanced growth path, we show that, compared with the old balanced growth path, a permanent fall in the trade cost in any one country: (i) raises the growth rates of capital in all countries for all periods; (ii) increases both the range of the imported varieties and that of the exported varieties in all countries for all periods; and (iii) raises welfare in all countries. Our theoretical predictions are qualitatively consistent with the empirical evidence.

Suggested Citation

  • Naito, Takumi, 2012. "A Ricardian model of trade and growth with endogenous trade status," Journal of International Economics, Elsevier, vol. 87(1), pages 80-88.
  • Handle: RePEc:eee:inecon:v:87:y:2012:i:1:p:80-88
    DOI: 10.1016/j.jinteco.2011.11.007
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sugata Marjit, "undated". "Virtual Trade and Growth," Economics Working Papers 02-01/2015, School of Business Administration, American University of Sharjah.
    2. Sugata Marjit & Biswajit Mandal, 2017. "Virtual trade between separated time zones and growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(2), pages 171-183, June.
    3. Naito, Takumi, 2017. "An asymmetric Melitz model of trade and growth," Economics Letters, Elsevier, vol. 158(C), pages 80-83.
    4. Takumi Naito, 2017. "An Eaton-Kortum model of trade and growth," Canadian Journal of Economics, Canadian Economics Association, vol. 50(2), pages 456-480, May.
    5. Wolf-Heimo Grieben & Fuat Sener, 2012. "North-South Trade, Unemployment and Growth: What’s the Role of Labor Unions?," Working Paper Series of the Department of Economics, University of Konstanz 2012-06, Department of Economics, University of Konstanz.
    6. NAITO Takumi, 2017. "A Larger Country Sets a Lower Optimal Tariff," Discussion papers 17037, Research Institute of Economy, Trade and Industry (RIETI).
    7. Takumi Naito, 2016. "Aid for Trade and Global Growth," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1178-1201, November.

    More about this item

    Keywords

    Ricardian model; Endogenous growth; Endogenous trade status; Unilateral trade liberalization; Terms of trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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