Does Trade Liberalization Benefit Young and Old Alike?
In an overlapping generations model, capital and labor produce two tradable goods. A kleptocratic government spends the tariff revenue. Trade liberalization benefits the retired generation if and only if the relative price of the capital-intensive good rises. Starting from autarky, a small liberalization benefits subsequent generations if and only if it hurts the retired one, a result reminiscent of the Stolper-Samuelson theorem. However, the terms-of-trade effect means a large liberalization may simultaneously raise the welfare of all generations. Copyright 1998 by Blackwell Publishing Ltd.
Year of publication: |
1998
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Authors: | Gokcekus, Omer ; Tower, Edward |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 6.1998, 1, p. 50-58
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Publisher: |
Wiley Blackwell |
Saved in:
Saved in favorites
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