Growth and welfare effects of unilateral trade liberalization with heterogeneous firms and asymmetric countries

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

How do reallocations across heterogeneous firms induced by unilateral trade liberalization affect long-run growth and welfare? To answer this question, we formulate a two-country model of endogenous growth, heterogeneous firms, and asymmetric countries. The relative wage and number of domestic varieties are endogenously determined. We show that even unilateral trade liberalization can raise the balanced growth rate. Although growth-enhancing trade liberalization is always welfare-enhancing in the symmetric country case, it does not generally ensure higher long-run welfare for at most one country because of asymmetric real wage effects caused by a change in the relative number of varieties.

Original languageEnglish
Pages (from-to)167-173
Number of pages7
JournalJournal of International Economics
Volume109
DOIs
Publication statusPublished - 2017 Nov

Keywords

  • Asymmetric countries
  • Endogenous growth
  • Heterogeneous firms
  • International knowledge spillovers
  • Unilateral trade liberalization

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'Growth and welfare effects of unilateral trade liberalization with heterogeneous firms and asymmetric countries'. Together they form a unique fingerprint.

Cite this