International Trade Theory and Policy

Gandolfo, Giancarlo

doi:10.1007/978-3-642-37314-5

Cited by 57 publications

(23 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Since the home country imports good 1 and exports good 2 (in accordance with comparative advantage), the necessary and sufficient condition for stability is the well‐known Marshall–Lerner condition that

e_{1} + e_{2}^{*} > 1

; where

e_{1} \equiv - (d Z_{1} / d p) p / Z_{1}

and

e_{2}^{*} \equiv - [d Z_{2}^{*} / d (1 / p)] (1 / p) / Z_{2}^{*}

, which denote the price elasticities of import demand at home and abroad, respectively. Although these elasticities are greater than zero under the assumption that the importable good is normal in each country, this restriction does not rule out the possibility of unstable equilibria, as emphasized by Gandolfo (, pp. 436–439).…”

Section: Open Economymentioning

confidence: 99%

Employment gains from minimum‐wage hikes under perfect competition: A simple general‐equilibrium analysis

Brecher

Gross

2017

Rev International Economics

View full text Add to dashboard Cite

Contrary to conventional wisdom, higher minimum wages may lead to greater levels of employment under perfect competition. We demonstrate this possibility in a simple general-equilibrium model of involuntary unemployment, with two goods produced by two factors and consumed by two representative households. Within our model, hiking a minimum wage redistributes income between heterogeneous consumers. This redistribution may create an excess demand for the labor-intensive good, and hence increase total employment to restore equilibrium, despite the fact that every firm becomes less labor intensive. | IN TRO DUCT IO NAs we show within a simple general-equilibrium model of perfect competition, higher minimum wages may paradoxically lead to greater levels of total employment. Such a paradox has typically been associated with departures from perfectly competitive behavior. For example, the pioneering article by Stigler (1946) includes a monopsonist in the labor market, Manning (1995) has firms setting wages to affect effort, and Flinn (2006) considers wage bargaining with search-and-matching frictions. In contrast to these studies, the present paper assumes that firms take wages as given, in the way usually associated with perfect competition.Intuitively, a hike in the minimum wage has three effects. First, producers engage in factor substitution, leading to a reduction in labor intensity within each industry. Second, because the wage hike raises the relative price of the labor-intensive good, consumers substitute away from this good, toward the capital-intensive one. Third, income is redistributed between heterogeneous households with different marginal propensities to consume, possibly increasing the relative demand for the labor-intensive good. If this income-redistribution effect outweighs the combined substitution effects in production and consumption, the resulting excess demand for the labor-intensive good requires an increase in employment to restore equilibrium. While the standard partial-equilibrium treatment of minimum-wage Rev Int Econ. 2018;26:165-170.wileyonlinelibrary.com/journal/roie

show abstract

e_{1} + e_{2}^{*} > 1

; where

e_{1} \equiv - (d Z_{1} / d p) p / Z_{1}

and

e_{2}^{*} \equiv - [d Z_{2}^{*} / d (1 / p)] (1 / p) / Z_{2}^{*}

Section: Open Economymentioning

confidence: 99%

Employment gains from minimum‐wage hikes under perfect competition: A simple general‐equilibrium analysis

Brecher

Gross

2017

Rev International Economics

View full text Add to dashboard Cite

show abstract

“…Recently, there has been a surging interest in the effects of increasing returns in wealth creation from new growth theory (Romer, , ) to new international trade theory (Krugman, , , ; Gandolfo, ). None of these theories were developed within the context of a general equilibrium model of an economy with production subject to IRSpec.…”

Section: Specialization and The Social Division Of Labormentioning

confidence: 99%

Market Economies With an Endogenous Social Division of Labor

Gilles

2018

Int Economic Review

View full text Add to dashboard Cite

I consider a general equilibrium model of a competitive market economy in which production is conducted through an endogenous social division of labor. I represent economic decision makers as “consumer–producers,” who consume as well as produce commodities. In this approach, the emergence of a nontrivial social division of labor is guided by Increasing Returns to Specialization (IRSpec) in production. Under IRSpec, I show existence of competitive equilibria, the two fundamental theorems of welfare economics, and characterize these equilibria. Markets equilibrate through the adjustment of the social division of labor; the production technologies completely determine the equilibrium prices.

show abstract

“…How does international trade and the formation of a FTA in particular, affect the distribution of production and trade activity within the free trade area? Trade theories may offer valuable insight (see Gandolfo for a comprehensive review).…”

Section: Explaining Trade Activity and Patterns: Review Of Trade Theomentioning

confidence: 99%

Trade Activity Between the EU and Its Neighbouring Countries: Trends and Potential

Kallioras

Pinna

2016

Tijd voor Econ & Soc Geog

View full text Add to dashboard Cite

The objective of the paper is to examine whether trade activity intensifies over time as the outcome of signed bilateral trade agreements. Focusing on (the trade component of) the European Neighbourhood Policy, the paper conducts a study of trade activity between the EU and its neighbouring countries, attempting to offer a detailed analysis in terms of trade patterns and to investigate whether proximity is combined with higher trade flows, within the framework of a free trade agreement. The analysis utilises data derived from BACI database and covers the period from 1995 to 2011. The findings of the paper indicate that there is a lot of potential for the expansion of trade activity between the EU and its neighbouring countries

show abstract

International Trade Theory and Policy

Cited by 57 publications

References 0 publications

Employment gains from minimum‐wage hikes under perfect competition: A simple general‐equilibrium analysis

Employment gains from minimum‐wage hikes under perfect competition: A simple general‐equilibrium analysis

Market Economies With an Endogenous Social Division of Labor

Trade Activity Between the EU and Its Neighbouring Countries: Trends and Potential

Contact Info

Product

Resources

About