Technological Progress, Terms of Trade, and Monopolistic Competition

Chul Chung

International Economic Journal, 2007, vol. 21, issue 1, pages 61-70

Abstract: This paper examines welfare implications of technological progress in the new trade model with monopolistic competition. Our result shows that labor-augmenting technological progress turns the terms of trade against the growing country while capital-augmenting technological progress shifts them in favor of the growing country. Unlike the Findlay-Grubert theorem, both technological progresses are welfare-enhancing. The key channel for this welfare effect is the love of variety in the new trade model.

Keywords: Findlay-Grubert theorem; technological progress; terms of trade; monopolistic competition; welfare (search for similar items in EconPapers)
Date: 2007

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Persistent link: http://EconPapers.repec.org/RePEc:taf:intecj:v:21:y:2007:i:1:p:61-70

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