Inequality and trade

Devashish Mitra () and Vitor Trindade ()

Canadian Journal of Economics, 2005, vol. 38, issue 4, 1253-1271

Abstract: We incorporate demand-side considerations in trade in a systematic but straightforward way. We do so by focusing on the role of inequality in the determination of trade flows and patterns. With non-homothetic preferences, when countries are similar in all respects but asset inequality, we find that trade is driven by specialization in , not production. Besides, these assumptions allow us to generate some interesting international spillover effects of redistributive policies. Finally, we study a model of monopolistic competition and find a novel V-shaped relationship between the ratio of inter-industry to intra-industry trade and a country's inequality.

JEL-codes: F11 F12 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (83)

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Working Paper: Inequality and Trade (2003)
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