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Tariffs, trade and unemployment in a disequilibrium model: issues and policies

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  • Jean-Luc Gaffard
  • Francesco Saraceno

Abstract

This paper studies the disequilibrium transition process engaged by increased openness to trade, and the effect of institutions, market behaviors and economic policies on that transition. The issue is analyzed with a simple two country (north and south), two goods model, amended in order to take into account the time dimension of both the production and the decision processes. Investigating the consequences of a tariff decrease by means of numerical simulations, we show to what extent wage and price setting, and the degree of tightness of monetary policy affect the outcome of the disequilibrium process. The main result is that capturing the gains associated with international trade requires market behaviors and economic policies, which are rather different from what is usually prescribed.
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Suggested Citation

  • Jean-Luc Gaffard & Francesco Saraceno, 2008. "Tariffs, trade and unemployment in a disequilibrium model: issues and policies," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 219-232, April.
    • Handle: RePEc:spr:joevec:v:18:y:2008:i:2:p:219-232
    DOI: 10.1007/s00191-007-0088-y
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    References listed on IDEAS

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    1. repec:hal:spmain:info:hdl:2441/1261 is not listed on IDEAS
    2. Jean-Luc Gaffard & Francesco Saraceno, 2007. "International Trade and Domestic Distortions: Modelling the Transition Process," Documents de Travail de l'OFCE 2007-18, Observatoire Francais des Conjonctures Economiques (OFCE).
    3. repec:hal:wpspec:info:hdl:2441/1261 is not listed on IDEAS
    4. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804.
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    Cited by:

    1. Jean-Luc Gaffard, 2011. "Compétitivité des territoires et stratégies de localisation des entreprises : les heurts de la mondialisation," SciencePo Working papers Main hal-01024497, HAL.
    2. Mario Amendola & Jean-Luc Gaffard & Fabrizio Patriarca, 2017. "Inequality and growth: the perverse relation between the productive and the non-productive assets of the economy," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 531-554, July.
    3. Patriarca, Fabrizio & Vona, Francesco, 2013. "Structural change and income distribution: An inverted-U relationship," Journal of Economic Dynamics and Control, Elsevier, vol. 37(8), pages 1641-1658.
    4. repec:spo:wpmain:info:hdl:2441/4ip86c7fo58bj979c67ml0ohqh is not listed on IDEAS
    5. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09i62c7761k is not listed on IDEAS
    6. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09i62c7761k is not listed on IDEAS
    7. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09i62c7761k is not listed on IDEAS
    8. Mario Amendola & Jean Luc Gaffard & Fabrizio Patriarca, 2015. "Inequality and Growth : the perverse relation between the productivity and the non-productive assets of the economy," Documents de Travail de l'OFCE 2015-28, Observatoire Francais des Conjonctures Economiques (OFCE).
    9. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09i62c7761k is not listed on IDEAS
    10. repec:hal:spmain:info:hdl:2441/4ip86c7fo58bj979c67ml0ohqh is not listed on IDEAS

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    More about this item

    Keywords

    Trade; Unemployment; Disequilibrium; Time to build; Wage flexibility; F11; F12; F42; F43;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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