Effects of trade liberalization on growth and welfare through basic and applied researches

Katsufumi Fukuda

Journal of Macroeconomics, 2019, vol. 62, issue C

Abstract: This paper constructs a trade and growth model with firm heterogeneity, and basic and applied (technological) researches. It considers R&D activities of basic science conducted by the government using asset income tax and applied technology conducted by profit-maximizing firms to re-analyze the effect of trade liberalization on growth and welfare. It shows that trade liberalization elevates the growth rate, if the population size is small in an exogenous international spillover and endogenous growth model with firm heterogeneity. Moreover, it shows that the same condition is sufficient for welfare gain through further exposure to trade.

Keywords: Trade liberalization; Heterogeneous firm; Basic and applied research; Endogenous growth model (search for similar items in EconPapers)
JEL-codes: F12 F15 O30 O33 O38 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:62:y:2019:i:c:s0164070417305852

DOI: 10.1016/j.jmacro.2018.08.011

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