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Short‐Run Trade Surplus Creation In A Two‐Sector Setting

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  • TAKAKAZU HONRYO
  • MAKOTO YANO

Abstract

This study investigates the effect of the suppression of competition in the domestic non‐tradable sector on a country's trade balance in a small open economy. Using a two‐sector model, this study demonstrates that the effect on the trade balance of such a suppression depends on the sector on which the policy is imposed. This result sharply contrasts with Yano's result in a one‐sector model demonstrating that such a policy unambiguously creates a trade surplus in the short run.

Suggested Citation

  • Takakazu Honryo & Makoto Yano, 2006. "Short‐Run Trade Surplus Creation In A Two‐Sector Setting," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 476-482, December.
    • Handle: RePEc:bla:jecrev:v:57:y:2006:i:4:p:476-482
    DOI: 10.1111/j.1468-5876.2006.00398.x
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    Cited by:

    1. Ma, Yan, 2009. "Trade theorems in a model of vertical production chain," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 70-80, January.

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