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International trade in resources: a general equilibrium analysis


  • Chichilnisky, Graciela


Physical considerations alone cannot explain the volatile behavior of resource prices, or the effects these have on different regions of the world. An optimization analysis may not suffice either, since typically there are several distinct objectives: conservation, cost-minimization, and the maximization of revenues by resource exporters. These issues require an economy analysis of markets. Markets for resources interact rather strongly with other markets: for goods such as food or industrial products and for inputs to production such as labor and capital. Such interactions are best studied with general equilibrium tools. These tools explain trade and the determination of prices across different markets. In a general equilibrium model, different economic agents have typically different objectives, a useful feature for the study of resource markets. Trade in resources takes place largely across different regions, so one is dealing with international trade. A system of simultaneous nonlinear equation can easily become unmanageable, and require computer analysis. Computer solutions cannot, however, disclose laws of economic behavior, nor can they explain why and how certain policies work. The challenge is therefore to represent the economy by a set of equations which is sufficiently simple to admit analytic or simple implicit solutions and the study of their qualitative behavior, while at the same time retaining the complexity needed to explore the issues involved. This paper will show how to perform this task and apply the results to study policy in the area of natural resources.

Suggested Citation

  • Chichilnisky, Graciela, 1985. "International trade in resources: a general equilibrium analysis," MPRA Paper 8356, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8356

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    References listed on IDEAS

    1. Chichilnisky, Graciela, 1980. "Basic goods, the effects of commodity transfers and the international economic order," Journal of Development Economics, Elsevier, vol. 7(4), pages 505-519, December.
    2. Chichilnisky, Graciela, 1984. "North-South trade and exported-led policies," Journal of Development Economics, Elsevier, vol. 15(1-3), pages 131-160.
    3. Chichilnisky, Graciela, 1988. "Resources and North-South trade: a macro analysis in open economies," MPRA Paper 8120, University Library of Munich, Germany.
    4. Chichilnisky, Graciela, 1981. "Terms of trade and domestic distribution : Export-led growth with abundant labour," Journal of Development Economics, Elsevier, vol. 8(2), pages 163-192, April.
    5. Chichilnisky, Graciela & Heal, Geoffrey & McLeod, Darryl, 1983. "Resources, trade and debt: the case of Mexico," MPRA Paper 8074, University Library of Munich, Germany.
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    Cited by:

    1. Chichilnisky, Graciela & Abraham, Ralph & Record, Ron, 1998. "North-South trade and the dynamics of the environment, Chapter 2.2," MPRA Paper 8818, University Library of Munich, Germany.
    2. Chichilnisky, Graciela, 1994. "North-South trade, property rights and the dynamics of environmental resources," MPRA Paper 8415, University Library of Munich, Germany.
    3. Chichilnisky, Graciela, 1994. "Property rights and the dynamics of renewable resources in North-South trade, Chapter 1," MPRA Paper 8513, University Library of Munich, Germany.

    More about this item


    resources; resource pricing; general equilibrium; international trade; nonlinear equations; policy; comparative statics; north-south; oil markets; trade; debt; transfer;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy


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