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Copyright of Papers in Regional Science is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Trade costs are known to be a major obstacle to international economic integration. Following the approach of New Open Economy Macroeconomics, this paper explores the effects of international trade costs in a micro-founded general equilibrium model that allows for different degrees of exchange rate pass-through. Trade costs are shown to create an endogenous home bias in consumption and the model performs well in matching empirical trade shares for OECD countries. In addition, trade costs reduce cross-country output and consumption correlations, and they magnify exchange rate volatility. Trade costs turn a monetary expansion into a beggar-thy-neighbor policy. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract This paper contains a brief summary of the nature of domestic policies and international agreements in agriculture and an outline of a simple computable general equilibrium model of the grain market. Preliminary results presented here suggest that the gains from global liberalization in agriculture could exceed the gains from further liberalization on trade in manufactured goods by the developed world. [ABSTRACT FROM AUTHOR]

Economic models are often judged by the reality of their assumptions or their success at predicting realistic outcomes. In this paper I suggest a different criterion for judging models in international trade theory in competitive settings: (i) Does the model conform to common sense in leading to results that even suggest the model is not necessary, and yet (ii) Can the same model be used as a tool to reveal in simple terms why certain outcomes that may appear surprising (often labeled a paradox in trade theory) nonetheless are correct. Many trade theory paradoxes appear as the result of income effects in simple general equilibrium models. Here attention centers instead on two of the familiar production models: the specific factors model and the Heckscher-Ohlin model, either separately or when combined. It is shown that very basic properties of production underlie many of the surprising results in competitive trade theory. ( JEL F11, D50) [ABSTRACT FROM AUTHOR]

This paper provides a survey of aspects of the theory of regional trading agreements and of empirical evidence relating to estimates of country gains and losses. It begins with a survey of the predictions of trade theory relating to the gains and losses to member and to non-member countries of liberalising goods trade preferentially by the formation of a free trade area or a customs union. Section III concerns the empirical evidence from Computable General Equilibrium (CGE) models. In Section IV the authors examine the CGE modelling of the recently-agreed free trade area between Australia and the USA as a case study. Other Sections discuss hub-and-spoke aspects of the evolving network of agreements and their impact on multilateral and unilateral modalities of trade liberalisation. Some general conclusions are drawn about the pattern of agreements and the need for reform of the World Trade Organization rules. [ABSTRACT FROM AUTHOR]

The U.S. lamb meat industry received protection from import competition in 1999 with a tariff-rate quota. This paper analyzes proposed and adopted policies using a partial equilibrium model of lamb meat and lambs incorporating imperfect competition in the packing industry. Under a tariff policy packers can only exercise oligopsony power in the lamb market and both packers and lamb growers benefit from protection. If a quota or tariff-rate quota policy is used, packers can assert oligopoly power. Packers benefit from protection, but lamb growers may not. Under the tariff-rate quota adopted, lamb growers suffer a welfare loss. [ABSTRACT FROM AUTHOR]

The debate between the North and the South about the enforcement of intellectual property rights is examined within a dynamic general equilibrium framework in which the North invents new products and the South imitates them. A welfare evaluation of a policy of tighter intellectual property rights is provided by decomposing the welfare change into four items: (a) terms of trade; (b) production composition; (c) available products; and (d) intertemporal allocation of consumption. The paper provides a theoretical evaluation of the effect of each one of these items and their relative size. The analysis proceeds in stages. It begins with an exogenous rate of innovation in order to focus on the first two elements. The following two components are added by endogenizing the rate of innovation. Finally, the paper considers the role of foreign direct investment. [ABSTRACT FROM AUTHOR]

The focal point in the recent literature on international trade and monopolistic competition is to recast the Chamberlinian partial-equilibrium theory in a general equilibrium framework. Using a similar setting, this paper asks whether the Chamberlinian tangency solution is stable under general equilibrium. Paradoxical results follow. When entry occurs, profit per firm can increase and the tangency solution can be unstable. A necessary and sufficient condition for stability is obtained. The concepts of average and marginal factor intensities play an important role in obtaining the stability. [ABSTRACT FROM AUTHOR]

Determines the patterns of efficient specializations in a multi-country, multi-commodity time-phased model of international trade. Need to have a measure of capital intensity in each sector; Implication of competitive equilibrium; Comparison of factor intensities and saving ratios.

The present paper examines a two-country, non-co-operative game in which the choice of trade policies (e.g., tariffs, quota, etc.) is considered as part of the overall game strategies. Using a class of constant elasticity offer curves, we find that the Nash-equilibrium trade policies are those that can make the offer curves the most elastic. When the choice set of trade policies expands, this Nash-equilibrium approaches the free trade equilibrium in the limit. [ABSTRACT FROM AUTHOR]

This paper proves the existence and uniqueness of Cournot equilibrium in models of international trade under oligopoly. The existence of Cournot equilibrium is established without the usual assumption that profit functions are concave. Instead the proof uses a weaker 'aggregate concavity' condition. A simple proof is used to establish the uniqueness of the equilibrium. And, the paper considers the implications of the assumptions, used to prove the existence and uniqueness of the equilibrium, on the comparative static results. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

A stochastic general-equilibrium model is used to explore the welfare effects of optimal monetary policy and the potential benefits of policy coordination. Cross-country perfectly symmetric shocks in the traded goods sectors and imperfectly correlated shocks in the non-traded goods sectors are considered. In this set-up, monetary policy may not be able to achieve efficient sectoral resource allocations within countries and avoid inefficient relative price changes across countries. Welfare gains from coordination are sizable if the shocks to the traded and non-traded goods sectors are negatively correlated and both sectors are of roughly equal size. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We develop a general equilibrium monopolistic competition model of trade with technical heterogeneity among firms and countries. With free entry, technical asymmetries between firms result in the endogenous determination of the equilibrium average efficiency of the industry. We show that trade reduces (increases) the minimum efficiency required to survive in the more (less) efficient country. This has important welfare implications: (1) Contrary to the constant elasticity of substitution homogeneous-firms model, trade affects welfare even when there is no love of variety. (2) There are circumstances in which trade liberalization leads to a loss of consumer welfare. [ABSTRACT FROM AUTHOR]

In this paper we consider the computation of an equilibrium in a pure exchange economy with a block diagonal pattern. Such a structure appears in, e.g., international trade models. Utilizing the block diagonal pattern, the full equilibrium problem is reformulated as a problem on the product space of several lower-dimensional price-simplices. Some numerical results show the usefulness of this method. [ABSTRACT FROM AUTHOR]

In this paper we outline the computation of general equilibrium in a pure exchange economy via a fixed point decomposition procedure. For general equilibrium models of the required structure, a full equilibrium may be computed through the solution of a sequence of smaller scale 'sub-equilibrium' problems. The text contains a presentation of the methods involved along with a discussion of initial computational experience for some numerical examples. [ABSTRACT FROM AUTHOR]

Within the context of a world where some goods may be nontraded and some factors may be internationally mobile, this paper analyzes the conditions under which trade in factors can replace trade in goods in the presence of tariffs or taxes. The crucial issue regarding the perfect substitutability between trade in goods and trade in factors turns out to be whether the sufficient conditions for international equalization of prices of goods and factors are exactly met, not met, or met in excess. [ABSTRACT FROM AUTHOR]

This paper studies some implications of economic integration in the context of a neoclassical model of international trade, public investment and capital mobility. Owing to the endogeneity of the productive public capital stock, international capital mobility, while equalizing returns to capital, can lead to a divergence in the wages earned by labour. We also demonstrate that international capital mobility can set off an 'infrastructure' investment boom. If the benefits of public capital spill over across national borders, governments in the Nash equilibrium spend the '1992' dividend on an excessive provision of public services, attempting to free-ride on the pubic capital of their neighbours. [ABSTRACT FROM AUTHOR]

We provide a rigorous general equilibrium analysis of the welfare effects of international trade in the presence of differentiated home non-traded products as well as tradeable products. We extend the standard monopolistic competition framework to incorporate differentiated non-traded products and demonstrate that in general the gains-from-trade proposition applies also to this framework. However, we also show that trade may reduce the variety of home products, and, thus, abstracting from all sources of gains from trade other than variety effects, we show that only in a very extreme case trade may make all countries worse off. [ABSTRACT FROM AUTHOR]

A dual approach to equilibrium in the production sector in international trade theory. Equilibrium in the production sector of an economy with fixed factor endowments and facing fixed prices for outputs may be obtained as a solution to a well-known maximization problem defined on the factor quantity space. In this paper we show that, with the aid of cost functions. equilibrium may be obtained as a solution to a minimization problem defined on the factor price space. This formulation is shown to be extremely useful in obtaining and illustrating standard results in international trade theory which find natural expression in the factor price space. These include the factor price equalization theorem anti the Stolper-Samuelson theorem. These arc illustrated diagrammatically in the factor price space. The formulation is generalized to include intermediate inputs and joint outputs and is further used to illustrate the concept of effective protection. [ABSTRACT FROM AUTHOR]

The objective here is to provide a dynamic two-country model of international trade that incorporates the price-specie-flow mechanism--the Hume process--and facilitates evaluation of the conditions that sustain Hume's argument. The investigation is integrated with various stylized features of Ricardo's [11] famous example of the Anglo-Portuguese trade. This will permit a brief examination of some issues that have been raised by economic historians to be undertaken at the close of the paper. The central issue to be addressed is the following: With the Hume process in operation must each of two nations engaged in trade arrive at a condition where they each possess fixed shares of the world's money, or is it possible for one of them continuously to increase its share of the global money supply? David Hume's price-specie-flow mechanism does not provide an unequivocal refutation of mercantilist fears over specie loss through international trade.[9] On the contrary, Hume's projected outcome rests heavily on the way specie is conceived of as entering or being withdrawn from the world economy. Even when the most mundane assumptions are made--competitive mining under conditions of increasing costs--there still are parameterizations of the model that rule out Hume's conclusions. Moreover, a host of less mundane assumptions--especially decreasing costs in mining--magnify the difficulties associated with attainment of the Hume equilibrium. [ABSTRACT FROM AUTHOR]

Comments on an article regarding international trade in the agriculture industry. Effect of the liberalization in global agricultural trade on welfare gains; Discussion of transportation cost; Implication of the free trade equilibrium for the agricultural sector.

Abstract: We study product line choice allowing for cost asymmetries but ruling out strategic motivations such as a desire to soften competition. We identify two forces that interact with asymmetric competition to shape equilibrium product lines. Possible outcomes range from head‐to‐head competition to complete separation of product lines and include the intermediate case of partial separation. In an international trade context, we predict which qualities a disadvantaged foreign producer will specialize in. If cost factors drive quality‐based discrimination then foreign firms sell only lower qualities. However, if demand factors are the main drivers then foreign firms sell only high qualities. [ABSTRACT FROM AUTHOR]

Barriers to international trade are known to be large but because of data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem, I derive a micro-founded measure of bilateral trade costs that indirectly infers trade frictions from observable trade data. I show that this trade cost measure is consistent with a broad range of leading trade theories including Ricardian and heterogeneous firms models. In an application I show that U.S. trade costs with major trading partners declined on average by about 40 between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions. [ABSTRACT FROM AUTHOR]

We investigate the design of domestic incentive regulations in a small economy opened to trade and its implications for international specialization and for trade openness to remain welfare-improving. More specifically, we append to an otherwise standard 2 × 2 Heckscher-Ohlin model of a small open economy a continuum of intermediate sectors producing nontradable goods used in tradable sectors. Those goods are produced by privately informed regulated firms. Asymmetric information induces distortions with general equilibrium impacts. The small economy becomes relatively richer in the informationally sensitive factor so that asymmetric information might reverse trade patterns. Free trade is Pareto-dominated by autarky when it exacerbates agency distortions. [ABSTRACT FROM AUTHOR]

Two countries face a strategic interdependence in producing intermediate goods. Producing these intermediate goods requires both domestic capital and another imported intermediate good. Individually, both economies determine a balanced growth path by taking into account this interdependence in different grades of awareness. By allowing for strategic interactions in the analysis, we adapted a two-agent dynamic setting and find an interior Markov perfect equilibrium as well as an open-loop equilibrium reflecting these different degrees of reaction. We find that main results resemble each other but growth rates will be higher when strategies are dynamically updated. [ABSTRACT FROM AUTHOR]

We propose a theory of task trade between countries that have similar relative factor endowments and technological capabilities, but may differ in size. Firms produce differentiated goods by performing a continuum of tasks, each of which generates local spillovers. Tasks can be performed at home or abroad, but offshoring entails costs that vary by task. In equilibrium, the tasks with the highest offshoring costs may not be traded. Among the remainder, those with the relatively higher offshoring costs are performed in the country that has the higher wage and the higher aggregate output. We discuss the relationship between equilibrium wages, equilibrium outputs, and relative country size. [ABSTRACT FROM AUTHOR]

This article develops a model that incorporates workers' fair wage preferences into a general equilibrium framework with heterogeneous firms. In a setting where the wage considered to be fair by workers depends on the productivity of the firm they are working in, we study the determinants of profits, involuntary unemployment and within-group wage inequality. We use this model to investigate the effects of globalization, thereby pointing to distributional conflicts that have so far not been accounted for: a simultaneous increase of average profits and involuntary unemployment as well as a surge in within-group wage inequality. [ABSTRACT FROM AUTHOR]

We assess the impacts of the European indicative biofuel policy on the farm sector with a farm-detailed computable general equilibrium model. Our simulations suggest that most of the biodiesel demand will be satisfied by imports while the bioethanol demand will be satisfied mostly by domestic production. We also show that the downstream livestock sectors are never negatively affected. Finally, the positive farm income effect is rather robust to our modeling assumptions: our central estimate is a 3.2 billion farm-income increase. However, the transfer efficiency of this policy is invariably limited. [ABSTRACT FROM AUTHOR]

Dawkins, Srinivasan, and Whalley (“Calibration,”Handbook of Econometrics, 2001) propose that estimation is calibration. We illustrate their point by examining a leading econometric application in the study of international and interregional trade by Anderson and van Wincoop (“Gravity with Gravitas: A Solution to the Border Puzzle,”American Economic Review, 2003). We replicate the econometric process and show it to be a calibration of a general equilibrium model. Our approach offers unique insights into structural estimation, and we highlight the importance of traditional calibration considerations when one uses econometric techniques to calibrate a model for comparative policy analysis. ( JEL F10, C13, C60) [ABSTRACT FROM AUTHOR]

We study the macroeconomic effects of international trade policy by integrating a Hecksher–Ohlin trade model into an optimal-growth framework. The model predicts that a more open economy will have higher factor productivity. Furthermore, there is a “selective development trap” to which countries may or may not converge, depending on policy. Income at the development trap falls as trade barriers increase. Hence, cross-country differences in barriers to trade may help explain the dispersion of per capita income observed across countries. The effects are quantified, and we show that protectionism can explain a relevant fraction of TFP and long-run income differentials across countries. [ABSTRACT FROM AUTHOR]

How does openness affect economic development? This question is answered in the context of a dynamic general equilibrium model of the world economy, where countries have technological differences that are both sector neutral and specific to the investment goods sector. Relative to a benchmark case of trade in credit markets only, consider (i) a complete restriction of trade and (ii) a full liberalization of trade. The first change decreases the cross-sectional dispersion of incomes only slightly, and produces a relatively small welfare loss. The second change, instead, decreases dispersion by a significant amount, and produces a very large welfare gain. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We investigate the impacts of multilateral removal of all border taxes and farm programs and their distortions on developing economies, using a world agriculture partial equilibrium model. We quantify changes in prices, trade flows, and production locations. Border measures and farm programs both affect world trade, but trade barriers have the largest impact. Following removal, trade expansion is substantial for most commodities, especially dairy, meats, and vegetable oils. Net agricultural and food exporters emerge with expanded exports; net importing countries with limited distortions before liberalization are penalized by higher world prices and reduced imports. We draw implications for current negotiations. [ABSTRACT FROM AUTHOR]

This article develops a two-country endogenous growth model with accumulation of both physical and human capital. We establish the existence of two-country balanced growth equilibria with physical and human capital in which a static and dynamic version of the Heckscher–Ohlin (HO) hypothesis hold true. We also show the existence of unbalanced growth equilibria in which the static and dynamic HO hypotheses can be violated. The multiplicity of paths with international trade emerge as a result of the intertemporal no-arbitrage condition when factor prices are equalized across countries. [ABSTRACT FROM AUTHOR]

Presents a computable general equilibrium model of world production and trade called VEMOD. Discussion of the applicability of trade theory to numerical modelling; Information on the algorithm used and the benchmarking procedure; Effects of technology transfer.

The article presents a response to a commentary on the author's article "Capital Exports: 1870-1914: Harmful or Beneficial?" which analyzes foreign investment in Great Britain during the 19th century. As the author's article demonstrated, the literature is by no means unanimously of the opinion that high foreign investment raised the returns on domestic capital and that a transfer to home investment would have lowered them. A sufficiently large switch to home investment might have raised productivity and international competitiveness to a point at which capital owners would have benefited also. Net foreign investment is also, quite independently, determined simultaneously by the balance of real trading transactions which have quite different determinants, and the substantial literature which debates how these quantities might be brought into equilibrium, and which are cause and which are effect has made some of the most interesting and most difficult contributions to the ongoing discussion.