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Capital accumulation and international trade

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  • Alvarez, Fernando

Abstract

Capital accumulation is introduced into a version of Eaton–Kortum model of international trade, imposing period by period balanced trade. The effects of tariff changes on world steady states and transition dynamics are studied. A calibrated version of the model is used to assess the short- and long-run gains from a world-wide elimination of trade tariffs. The determinants and importance of convergence in world-wide capital as well as convergence on the relative capitals and incomes are analyzed. Positive and normative comparisons with an analogous static model are conducted, as well as comparisons steady state welfare comparisons vs full dynamic gains.

Suggested Citation

  • Alvarez, Fernando, 2017. "Capital accumulation and international trade," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 1-18.
  • Handle: RePEc:eee:moneco:v:91:y:2017:i:c:p:1-18
    DOI: 10.1016/j.jmoneco.2017.09.005
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    References listed on IDEAS

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    Cited by:

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    2. Ravikumar, B. & Santacreu, Ana Maria & Sposi, Michael, 2019. "Capital accumulation and dynamic gains from trade," Journal of International Economics, Elsevier, vol. 119(C), pages 93-110.
    3. Carter Mix, 2020. "Technology, Geography, and Trade over Time: The Dynamic Effects of Changing Trade Policy," International Finance Discussion Papers 1304, Board of Governors of the Federal Reserve System (U.S.).
    4. Yang, Han, 2020. "Dynamic Trade, Education and Intergenerational Inequality," MPRA Paper 99976, University Library of Munich, Germany.
    5. Hu, Chenyue, 2020. "Industrial specialization matters: A new angle on equity home Bias," Journal of International Economics, Elsevier, vol. 126(C).
    6. Ricardo Reyes-Heroles & Sharon Traiberman & Eva Van Leemput, 2020. "Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(3), pages 456-508, September.
    7. Anderson, James E. & Larch, Mario & Yotov, Yoto V., 2019. "Trade and investment in the global economy: A multi-country dynamic analysis," European Economic Review, Elsevier, vol. 120(C).
    8. Mariarosaria Comunale & Justas Dainauskas & Povilas Lastauskas, 2021. "What explains excess trade persistence? A theory of habits in the supply chains," CAMA Working Papers 2021-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    9. Michael Sposi & Kei-Mu Yi & Jing Zhang, 2021. "Trade Integration, Global Value Chains, and Capital Accumulation," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(3), pages 505-539, September.
    10. Ricardo Reyes-Heroles & Sharon Traiberman & Eva Van Leemput, 0. "Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 0, pages 1-53.
    11. Yang, Han, 2019. "Dynamic Trade, Education and Intergenerational Inequality," MPRA Paper 96054, University Library of Munich, Germany.
    12. Adam Hal Spencer, 2020. "Policy effects of international taxation on firm dynamics and capital structure," Discussion Papers 2020-25, University of Nottingham, GEP.

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    More about this item

    Keywords

    Capital accumulation; International trade; Dynamics; Convergence; Tariffs;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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