No |
SDES-2018-19 |
Title |
On the General Impossibility of Persistent Unequal Ex-
change Free Trade Equilibria in the Pre-industrial World
Economy |
Author |
Soh Kaneko and Naoki Yoshihara |
Abstract |
This paper analyzes the persistency of the unequal exchange of labor (UE) in international trade. An intertemporal model of a world economy is de
ned with a leisure preference and no discount factor. Every incompletely specialized free trade equilibrium is characterized as having non-persistent UE, which veri
es the convergence of economies without relying on economic growth or diminishing returns to scale. In particular, it characterizes a sub-class of equilibria in which the sequence of real interest rates does not con-verge to zero, but UE tends to disappear while equivalently the distribution of capital assets tends to be equalized in the long run. |
Revised version published in |
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