The gains from trade in a small monetary economy
In general equilibrium under constant returns to scale and perfect competition the normative theory of international trade is examined for a monetary, not a barter, economy. Persons exhibit flow demand for real balances just as they do for commodities because money provides well-being salient utility insofar as its content is desire fulfilment, satisfaction or usefulness. For such a monetary small open economy, an additional terms-of-trade effect or inflationary effect of a tariff is identified, which drives many unusual results including the sub-optimality of free trade, unless the exchange rate is flexible and the commodities and real balances are weakly separable.
Volume (Year): 15 (2006)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RJTE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RJTE20|
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.:
- J. N. Bhagwati & T. N. Srinivasan, 1969. "Optimal Intervention to Achieve Non-Economic Objectives," Review of Economic Studies, Oxford University Press, vol. 36(1), pages 27-38.
- Neary, Peter & Ruane, Frances P, 1988.
"International Capital Mobility, Shadow Prices, and the Cost of Protection,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 571-85, November.
- J. Peter Neary & Frances P. Ruane, 1984. "International capital mobility, shadow prices and the cost of protection," Working Papers 198432, School of Economics, University College Dublin.
- Neary, J Peter & Ruane, Frances, 1985. "International Capital Mobility, Shadow Prices and the Cost of Protection," CEPR Discussion Papers 58, C.E.P.R. Discussion Papers.
- Dusansky, Richard, 1989. "The Demand for Money and Goods in the Theory of Consumer Choice with Money," American Economic Review, American Economic Association, vol. 79(4), pages 895-901, September.
- Kemp, Murray C, 1982. "The Monetary Determinants of Real Trade," Economica, London School of Economics and Political Science, vol. 49(195), pages 261-66, August.
- F. H. Hahn, 1959. "The Balance of Payments in a Monetary Economy," Review of Economic Studies, Oxford University Press, vol. 26(2), pages 110-125.
- Samuelson, Paul A & Sato, Ryuzo, 1984. "Unattainability of Integrability and Definiteness Conditions in the General Case of Demand for Money and Goods," American Economic Review, American Economic Association, vol. 74(4), pages 588-604, September.
- G. C. Archibald & R. G. Lipsey, 1958. "Monetary and Value Theory: A Critique of Lange and Patinkin," Review of Economic Studies, Oxford University Press, vol. 26(1), pages 1-22.
- Feenstra, Robert C., 1986. "Functional equivalence between liquidity costs and the utility of money," Journal of Monetary Economics, Elsevier, vol. 17(2), pages 271-291, March.
- Blejer, Mario I. & Hillman, Arye L., 1982. "On the dynamic non-equivalence of tariffs and quotas in the monetary model of the balance of payments," Journal of International Economics, Elsevier, vol. 13(1-2), pages 163-169, August.
- Boyle, Glenn W & Young, Leslie, 1988. "Asset Prices, Commodity Prices, and Money: A General Equilibrium, Rational Expectations Model," American Economic Review, American Economic Association, vol. 78(1), pages 24-45, March.
When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:15:y:2006:i:4:p:403-430. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.