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How crucial are preferences for non-tradable goods and cross-country sectoral TFP gap for integration?

Author

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  • Marion Davin

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

  • Karine Gente

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Carine Nourry

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper deals with the effects of economic integration in a 2x 2x 2 model of overlapping generations. We distinguish between a non-tradable and a tradable sector which use human and physical capital. We show that the preference for non-tradable consumption in total consumption expenditure and sectoral productivities are crucial factors to determine which country does benefit from integration in terms of economic growth. Short-run and long-run effects of integration may differ, especially when countries are heterogeneous and when there exist high cross border externalities in education. Moreover, an impatient country may lose to integration when it has a comparative advantage in the tradable sector and/or when the preference for non-tradable goods is high.

Suggested Citation

  • Marion Davin & Karine Gente & Carine Nourry, 2018. "How crucial are preferences for non-tradable goods and cross-country sectoral TFP gap for integration?," Post-Print hal-01944628, HAL.
    • Handle: RePEc:hal:journl:hal-01944628
    DOI: 10.1016/j.jmacro.2018.05.007
    Note: View the original document on HAL open archive server: https://hal.science/hal-01944628
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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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