An Eaton–Kortum model of trade and growth

    Research output: Contribution to journalArticle

    2 Citations (Scopus)

    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.

    Original languageEnglish
    Pages (from-to)456-480
    Number of pages25
    JournalCanadian Journal of Economics
    Volume50
    Issue number2
    DOIs
    Publication statusPublished - 2017 May 1

    Fingerprint

    Trade liberalization
    Trade and growth
    Extensive margin
    Trade costs
    AK model
    Destination
    Balanced growth
    Welfare implications
    Short-run
    Ricardian model

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    An Eaton–Kortum model of trade and growth. / Naito, Takumi.

    In: Canadian Journal of Economics, Vol. 50, No. 2, 01.05.2017, p. 456-480.

    Research output: Contribution to journalArticle

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