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- Title
An Eaton-Kortum model of trade and growth.
- Authors
Naito, Takumi
- Abstract
We combine a multi-country, continuum-good Ricardian model of Eaton and Kortum (2002) with a multi-country AK model of Acemoglu and Ventura (2002) to examine how trade liberalization affects countries' growth rates and extensive margins of trade over time. Focusing on the three-country case, we obtain three main results. First, a permanent fall in any trade cost raises the balanced growth rate. Second, trade liberalization increases the liberalizing countries' long-run fractions of exported varieties to all destinations. Third, the long-run effects of trade liberalization are different from its short-run effects, which can reverse the welfare implications of the static Eaton-Kortum model.
- Subjects
FREE trade; RICARDIAN Model of International Trade; INTERNATIONAL trade -- Econometric models; INTERNATIONAL economic relations; COMMERCE
- Publication
Canadian Journal of Economics, 2017, Vol 50, Issue 2, p456
- ISSN
0008-4085
- Publication type
Article
- DOI
10.1111/caje.12265