Immiserizing Growth and the Metzler Paradox in the Ricardian Model
Conditions for the occurrence of immiserizing growth and the Metzler paradox are analysed in the Ricardian model when consumers in the foreign country have Leontief preferences while consumers in the home country have Cobb-Douglas preferences. By using specific functional forms, the conditions for the occurrence of the two paradoxes are defined in terms of the exogenous parameters of the model rather than endogenous variables such as the elasticity of demand for exports in the conditions of Bhagwati (1958) and Metzler (1949a and b). It is shown that the simultaneous occurrence of both paradoxical results is possible for some parameter values.
|Date of creation:||Jul 2009|
|Date of revision:|
|Publication status:||Forthcoming in International Economic Journal|
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- Lloyd A. Metzler, 1949. "Tariffs, International Demand, and Domestic Prices," Journal of Political Economy, University of Chicago Press, vol. 57, pages 345.
- Jones, Ronald W, 1969. "Tariffs and Trade in General Equilibrium: Comment," American Economic Review, American Economic Association, vol. 59(3), pages 418-24, June.
- Jones, Ronald W, 1985. "Income Effects and Paradoxes in the Theory of International Trade," Economic Journal, Royal Economic Society, vol. 95(378), pages 330-44, June.
- Falvey, Rodney E, 1975. "A Note on the Distinction between Tariffs and Quotas," Economica, London School of Economics and Political Science, vol. 42(167), pages 319-26, August.
- Lloyd A. Metzler, 1949. "Tariffs, the Terms of Trade, and the Distribution of National Income," Journal of Political Economy, University of Chicago Press, vol. 57, pages 1.
- Jagdish Bhagwati, 1958. "Immiserizing Growth: A Geometrical Note," Review of Economic Studies, Oxford University Press, vol. 25(3), pages 201-205.
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