Transfers, the terms of trade, and capital accumulation

Emily Cremers () and Partha Sen

Canadian Journal of Economics, 2009, vol. 42, issue 4, 1599-1616

Abstract: In the context of a two-sector overlapping-generations model it is demonstrated that a steady-state transfer paradox may arise under commodity trade with stability and without distortions or bystanders. The existence of the paradox is due to the effect of the transfer on world capital accumulation, which is shown to always (i.e., for any ranking of factor intensities and savings rates) improve the donor's terms of trade. Transfers may also improve steady-state welfare for both donor and recipient and produce paradoxical welfare results along the transition path.

JEL-codes: F11 F43 O4 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Transfers, the Terms of Trade and Capital Accumulation (2011)
Working Paper: Transfers, the Terms of Trade and Capital Accumulation (2009)
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