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A new Ricardian model of trade, growth and inequality- The role of financial capital

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  • Sugata Marjit

Abstract

The classical Wage Fund (Financial Capital) framework is integrated with the Ricardian model of comparative advantage. It can easily and effectively reflect on critical contemporary issues without the ammunitions of a more complex neoclassical system. Some of the results are as follows. Trade pampers inequality across the globe independent of trade patterns. It is likely to increase growth rate but that rate declines over time. Technological progress without capital accumulation magnifies inequality in or out of steady state. Financiers may wish to invest in innovations and outsource production to the rest of the world. Financial crisis in terms of credit shortage hurts workers but benefits capitalists etc. Interestingly this Ricardian model with capital and labour replicates many iconic neoclassical results without neoclassical assumptions.

Suggested Citation

  • Sugata Marjit, 2020. "A new Ricardian model of trade, growth and inequality- The role of financial capital," Discussion Papers 2020-28, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:2020-28
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2020/2020-28.pdf
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    References listed on IDEAS

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    6. Sugata Marjit & Anwesha Basu & C. Veeramani, 2019. "Growth Gains from Trade," CESifo Working Paper Series 7905, CESifo.
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    Cited by:

    1. Marjit, Sugata & Das, Gouranga G., 2021. "The new Ricardian specific factor model," Journal of Asian Economics, Elsevier, vol. 76(C).

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    Keywords

    New Ricardo; Neoclassical; Trade; Growth; Inequality;
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