IDEAS home Printed from https://ideas.repec.org/a/bla/reviec/v12y2004i5p749-768.html
   My bibliography  Save this article

An Overlapping‐generations Model of Escape Clause Protection

Author

Listed:
  • Carl Davidson
  • Steven J. Matusz

Abstract

The paper explores the efficiency consequences of using temporary protection to ease adjustment following an unexpected, permanent improvement in a country's terms of trade. In the model, workers trade off the potentially higher wage that the export sector has to offer with a lower job acquisition rate. An unexpected improvement in the terms of trade surprises old workers who cannot undo the decisions they made while young. Some old workers who had not planned to search for work in the export sector end up changing their plans, adding to the pool of searchers, creating congestion. Temporary protection can reduce congestion and make the transition to the new steady state smoother. Moreover, there are conditions under which the congestion externalities lead to multiple steady‐state equilibria that can be Pareto‐ranked. Temporary protection may lead to a permanent change in the allocation of resources, and this permanent change may be welfare‐enhancing.

Suggested Citation

  • Carl Davidson & Steven J. Matusz, 2004. "An Overlapping‐generations Model of Escape Clause Protection," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 749-768, November.
    • Handle: RePEc:bla:reviec:v:12:y:2004:i:5:p:749-768
    DOI: 10.1111/j.1467-9396.2004.00480.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9396.2004.00480.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9396.2004.00480.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Daniel Trefler, 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement," American Economic Review, American Economic Association, vol. 94(4), pages 870-895, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Artuc, Erhan & Lederman, Daniel & Porto, Guido, 2015. "A mapping of labor mobility costs in the developing world," Journal of International Economics, Elsevier, vol. 95(1), pages 28-41.
    2. Mazumder, Debojyoti, 2013. "Inheritance, Search Friction and International Trade: A General Equilibrium Model," MPRA Paper 55250, University Library of Munich, Germany.
    3. Falvey, Rod & Greenaway, David & Silva, Joana, 2010. "Trade liberalisation and human capital adjustment," Journal of International Economics, Elsevier, vol. 81(2), pages 230-239, July.
    4. Emily Blanchard & Gerald Willmann, 2007. "Political Stasis or Protectionist Rut? Policy Mechanisms for Trade Reform in a Democracy," CESifo Working Paper Series 2070, CESifo.
    5. Rod Falvey & David Greenaway & Joana Silva, 2018. "International competition, returns to skill and labour market adjustment," The World Economy, Wiley Blackwell, vol. 41(4), pages 1000-1024, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elhanan Helpman, 2010. "Labor Market Frictions as a Source of Comparative Advantage, with Implications for Unemployment and Inequality," NBER Working Papers 15764, National Bureau of Economic Research, Inc.
    2. Marina Capparucci & Emanuela Ghignoni & Alina Verashchagina & Natalia Vorozhbit, 2015. "The Drivers of Innovation in the Italian Manufacturing Sector," Economia & lavoro, Carocci editore, issue 3, pages 111-128.
    3. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
    4. Yuko Imura, 2023. "Reassessing Trade Barriers with Global Production Networks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 77-116, December.
    5. Kym Anderson, 2005. "On the Virtues of Multilateral Trade Negotiations," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 414-438, December.
    6. Serge Coulombe, 2008. "Employment Adjustments in High-Trade-Exposed Manufacturing in Canada," Working Papers 0803E, University of Ottawa, Department of Economics.
    7. Steven Bond‐Smith, 2022. "Discretely innovating: The effect of limited market contestability on innovation and growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 301-327, July.
    8. Kim Huynh & David Jacho-Chávez & Robert Petrunia & Marcel Voia, 2015. "A nonparametric analysis of firm size, leverage and labour productivity distribution dynamics," Empirical Economics, Springer, vol. 48(1), pages 337-360, February.
    9. Breinlich, Holger, 2008. "Trade liberalization and industrial restructuring through mergers and acquisitions," Journal of International Economics, Elsevier, vol. 76(2), pages 254-266, December.
    10. Conconi, Paola & Legros, Patrick & Newman, Andrew F., 2012. "Trade liberalization and organizational change," Journal of International Economics, Elsevier, vol. 86(2), pages 197-208.
    11. Philippe Aghion & Robin Burgess & Stephen J. Redding & Fabrizio Zilibotti, 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," American Economic Review, American Economic Association, vol. 98(4), pages 1397-1412, September.
    12. Ken Itakura & Hiro Lee, 2023. "Should the United States rejoin the Trans-Pacific trade deal?," International Economics and Economic Policy, Springer, vol. 20(2), pages 235-255, May.
    13. Shon Ferguson & Rikard Forslid, 2019. "Sizing Up the Impact of Embassies on Exports," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 278-297, January.
    14. Garth Frazer & Johannes Van Biesebroeck, 2010. "Trade Growth under the African Growth and Opportunity Act," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 128-144, February.
    15. Kox, Henk L.M. & Rojas Romasgosa, Hugo, 2019. "Gravity estimations with FDI bilateral data: Potential FDI effects of deep preferential trade agreements," MPRA Paper 96318, University Library of Munich, Germany.
    16. Beverly Lapham & Hiroyuki Kasahara, 2005. "Import Protection as Export Destruction," 2005 Meeting Papers 528, Society for Economic Dynamics.
    17. repec:spo:wpmain:info:hdl:2441/56hfhhan3g9l78j1scjqb8vd5l is not listed on IDEAS
    18. Chaney, Thomas & Ossa, Ralph, 2013. "Market size, division of labor, and firm productivity," Journal of International Economics, Elsevier, vol. 90(1), pages 177-180.
    19. Joel Rodrigue, 2014. "Multinational Production, Exports and Aggregate Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 243-261, April.
    20. Ana Paula Cusolito & Claire H. Hollweg, 2015. "Trade Policy Barriers: An Obstacle to Export Diversification in Eurasia," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(4), pages 91-129, June.
    21. Yang, Tina & Zhao, Shan, 2014. "CEO duality and firm performance: Evidence from an exogenous shock to the competitive environment," Journal of Banking & Finance, Elsevier, vol. 49(C), pages 534-552.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:12:y:2004:i:5:p:749-768. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.