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Effects of growth on relative prices in a two-good n-country model

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  • Sérgio Ribeiro da Costa Welang

    (Fundação Getúlio Vargas)

Abstract

This paper analyses the effect of an increase of the enodwment in a two-good n-country model. It is shown that the endowment of good one can go up and the price of the same good relative to good two can also increase. However, this "perverse" effect cannot occur in both goods if the economy is at a tatonnement stable equilibrium. This is a new restriction in the form of the equilibrium manifold of an exchange economy. It is also shown that this "double perversity" is the case with normal goods when the equilibrium is unstable.

Suggested Citation

  • Sérgio Ribeiro da Costa Welang, 1993. "Effects of growth on relative prices in a two-good n-country model," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 8(1), pages 57-63.
    • Handle: RePEc:emx:esteco:v:8:y:1993:i:1:p:57-63
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/293/296
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    References listed on IDEAS

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    1. Majumdar, Mukul & Mitra, Tapan, 1985. "A result on the transfer problem in international trade theory," Journal of International Economics, Elsevier, vol. 19(1-2), pages 161-170, August.
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