Terms of Trade Shocks and Endogenous Search Unemployment: A Two-sector Model with Non-Traded goods

Yu Sheng () and Xingpeng Xu

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: We develop a simple and tractable two-sector search model featuring a non-traded sector and endogenous search unemployment to examine the impact of terms of trade shocks on unemployment. We show that changes in terms of trade will not only lead to employment reallocation across sectors, as in the traditional trade models, but more importantly, impact upon search unemployment within each sector. Specifically, we show that an improvement (deterioration) of terms of trade reduces (increases) unemployment rates in both traded and non-traded sectors.

Keywords: two-sector search model; trade and unemployment; non-traded good (search for similar items in EconPapers)
JEL-codes: F16 F23 J64 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-06
New Economics Papers: this item is included in nep-dge and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Terms of Trade Shocks and Endogenous Search Unemployment: A Two-Sector Model with Non-Traded Goods (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c012_025

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