This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Does Preferential Trade Benefit Poor Countries? A General Equilibrium Assessment with Nonhomothetic Preferences

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Albert de Vaal
Joachim Stibora
Abstract

We study the effects of preferential trade agreements (PTA) in a model where the income matters for consumption patterns. We develop a three-country Ricardian trade model in which goods are ranked according to priority and where economies differ in their income level. The poorest (richest) country has a comparative advantage in the production of lowest-ranked (highest-ranked) goods, specializing in goods with low (high) income elasticities in demand. The medium rich country specializes in the production of the intermediate-ranked commodities. We .nd that being excluded from a PTA is detrimental for a low-income country, but not for the high-income country. Becoming a member of a PTA does also not guarantee welfare gains for the low income country, unless it is so poor that it cannot import the higher-ranked goods that the rich country produces.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.degit.ifw-kiel.de/papers/degit_11/C011_057.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_057.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 44 pages JEL Classification: F1
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:deg:conpap:c011_057

Contact details of provider:
Postal: D�sternbrooker Weg 120, D-24105 Kiel
Phone: +49 431 8814-206
Fax: +49 431 85853
Email:
Web page: http://www.degit.ifw-kiel.de/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Dr. Birgit Wolfrath).

Related research
Keywords: Ricardian trade model; asymmetric demand complementarities; Customs Union; income distribution;

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Conway, Patrick J & Appleyard, Dennis R & Field, Alfred J, Jr, 1989. "Trade Agreements vs. Unilateral Tariff Reductions: Evidence from Modeling with a Continuum of Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 775-94, November. [Downloadable!] (restricted)
  2. Hunter, Linda, 1991. "The contribution of nonhomothetic preferences to trade," Journal of International Economics, Elsevier, vol. 30(3-4), pages 345-358, May. [Downloadable!] (restricted)
  3. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June. [Downloadable!] (restricted)
  4. Stokey, Nancy L, 1991. "The Volume and Composition of Trade between Rich and Poor Countries," Review of Economic Studies, Blackwell Publishing, vol. 58(1), pages 63-80, January. [Downloadable!] (restricted)
    Other versions:
  5. Peter K. Schott, 2001. "Do Rich and Poor Countries Specialize in a Different Mix of Goods? Evidence from Product-Level US Trade Data," NBER Working Papers 8492, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Kiminori Matsuyama, 2000. "A Ricardian Model with a Continuum of Goods under Nonhomothetic Preferences: Demand Complementarities, Income Distribution, and North-South Trade," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1093-1120, December. [Downloadable!] (restricted)
    Other versions:
  7. Berglas, Eitan, 1979. "Preferential Trading Theory: The n Commodity Case," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 315-31, April. [Downloadable!] (restricted)
  8. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Income Distribution, Market Size, and Industrialization," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 537-64, August. [Downloadable!] (restricted)
    Other versions:
Full references

Statistics
Access and download statistics

Did you know? The yearly budget of IDEAS is exactly $0: it relies entirely on volunteer work.

This page was last updated on 2009-10-21.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.