Immiserizing Growth and the Metzler Paradox in the Ricardian Model

Conditions for the occurrence of immiserizing growth and the Metzler paradox are analysed in the Ricardian model when consumers in the foreign country have Leontief preferences while consumers in the home country have Cobb-Douglas preferences. By using specific functional forms, the conditions for the occurrence of the two paradoxes are defined in terms of the exogenous parameters of the model rather than endogenous variables such as the elasticity of demand for exports in the conditions of Bhagwati (1958) and Metzler (1949a and b). It is shown that the simultaneous occurrence of both paradoxical results is possible for some parameter values.