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Of the four basic theorems of CRS trade theory, only the Stolper-Samuelson theorem has an application to the very short run. On impact, a small tariff increases the disposable real income of a representative portfolio if and only if the protected sector is more capital intensive than average....
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Without a little inflation, bad investment drives out good. Moderate inflation enhances productivity by functioning like a scarecrow: the rise in nominal mortgage rates deters myopic home buyers, who naively watch the nominal interest rate (in its guise as the payment-to-income ratio) rather...
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