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Fisherian and Ricardian trade

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  • Sinn, Stefan

Abstract

This paper discusses the difference between Fisherian and Ricardian trade in terms of a simple two-period model of a small open economy. Fisherian or intertemporal trade occurs when goods are traded today against the promise to deliver goods in the future. The resulting net resource transfer is equal to an international flow of capital. Ricardian trade occurs when there are no international capital flows and the trade account is balanced. The model suggests that once international trade is primarily of Fisherian nature, the direction and volume of trade are best explained by variables that take intertemporal aspects into consideration such as the interest rate and the expected prices of goods.

Suggested Citation

  • Sinn, Stefan, 1991. "Fisherian and Ricardian trade," Kiel Working Papers 484, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:484
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    References listed on IDEAS

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    More about this item

    Keywords

    International capital mobility; saving; investment; current account adjustment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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