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The transfer problem: A complete characterization

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    (Department of Economics, PUC-Rio, Brazil and Department of Economics, University of York, UK)

Abstract

The transfer problem is defined by the possibility for a donor country to end up better off after having given away some resources to another country. The simplest version of that problem can be formulated in a two consumer exchange economy with fixed total resources. Existence of a transfer problem at some equilibrium is known to be equivalent to instability in the case of two goods. This characterization is extended to an arbitrary number of goods by showing that a transfer problem exists at a (regular) equilibrium if and only if this equilibrium has an index value equal to -1. Samuelson's conjecture that there is no transfer problem at tatonnement stable equilibria is therefore true for any number of goods.

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  • ,, 2014. "The transfer problem: A complete characterization," Theoretical Economics, Econometric Society, vol. 9(2), May.
    • Handle: RePEc:the:publsh:1356
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    References listed on IDEAS

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    Cited by:

    1. Vladimir Gligorov, 2016. "The Transfer and Adjustment Problems in the Balkans," wiiw Balkan Observatory Working Papers 125, The Vienna Institute for International Economic Studies, wiiw.
    2. Minwook KANG, 2015. "A Concrete Example of the Transfer Problem with Multiple Equilibria," Economic Growth Centre Working Paper Series 1504, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    3. Demuynck, Thomas & Rock, Bram De & Ginsburgh, Victor, 2016. "The transfer paradox in welfare space," Journal of Mathematical Economics, Elsevier, vol. 62(C), pages 1-4.
    4. Kang, Minwook & Ye, Lei Sandy, 2016. "Advantageous redistribution with three smooth CES utility functions," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 171-180.
    5. Tomohiro Uchiyama, 2017. "A geometric approach to the transfer problem for a finite number of traders," Papers 1701.04491, arXiv.org.
    6. Ram Sewak Dubey & Minwook Kang, 2019. "Transfer paradox in a stable equilibrium," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 259-269, December.

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    More about this item

    Keywords

    Transfer problem; regular equilibrium; index value;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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