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Measurable Dynamic Gains from Trade

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  • Baldwin, Richard

    (Columbia University, NBER and CEPR)

Abstract

Productive factors such as human and physical capital are accumulated and trade can affect the steady-state levels of such factors. Consequently, trade liberalization will have dynamic effects on output and welfare as the economy moves to its new steady state, in addition to its usual static effects. The output impact of this dynamic effect is measurable and appears to be quite large. The welfare impact of this dynamic effect is also measurable. The size of this dynamic gain from trade depends on the importance of external scale economies.

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  • Baldwin, Richard, 1990. "Measurable Dynamic Gains from Trade," Working Paper Series 270, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0270
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade liberalization; Gains from trade; Welfare;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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