Title:
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Growing through trade in intermediate goods: the role of foreign growth and domestic tariffs
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Author:
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Álvarez Albelo, Carmen; Manresa, Antonio, 1954-; Pigem-Vigo, Mònica
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Other authors:
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Universitat de Barcelona |
Abstract:
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We show that pure Ricardian trade can account for the empirical evidence that domestic growth is more affected by foreign growth than by trade openness. To do this, we develop a two‐country model involving a backward economy that exchanges intermediate goods with a faster growing country. We obtain three main results regarding growth and welfare of the backward economy: (i) the growth‐enhancing comparative advantage is facilitated by faster foreign growth; (ii) the growth rate may be negatively affected or unaffected by a domestic tariff, while it is always positively impacted by foreign growth; and (iii) a domestic tariff could be welfare‐improving. |
Subject(s):
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-Comerç exterior -Creixement econòmic -Foreign trade -Economic growth |
Rights:
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(c) Scottish Economic Society, 2018
info:eu-repo/semantics/embargoedAccess |
Document type:
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Article Article - Accepted version |
Published by:
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Wiley
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