TY - JOUR
T1 - An Eaton–Kortum model of trade and growth
AU - Naito, Takumi
N1 - Funding Information:
I am grateful to co-editor Josh Ederington, an anonymous referee, Yan Ma, Hiroshi Mukunoki, Ryoji Ohdoi and conference and seminar participants at the Australasian Trade Workshop, the European Trade Study Group, the Seminar in Memory of Yasuo Uekawa, the Japanese Economic Association, Kobe University, Kyoto University, Nihon University, Bank of Japan, GRIPS and RIETI for their helpful comments and suggestions. I also appreciate the financial support from JSPS (25380336) and RIETI. Any remaining errors are mine.
Publisher Copyright:
© 2017 Canadian Economics Association
PY - 2017/5/1
Y1 - 2017/5/1
N2 - 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.
AB - 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.
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U2 - 10.1111/caje.12265
DO - 10.1111/caje.12265
M3 - Article
AN - SCOPUS:85019111721
SN - 0008-4085
VL - 50
SP - 456
EP - 480
JO - Canadian Journal of Economics
JF - Canadian Journal of Economics
IS - 2
ER -