Effects of growth on relative prices in a two-good n-country model

Sérgio Ribeiro da Costa Welang
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Sérgio Ribeiro da Costa Welang: Fundação Getúlio Vargas

Estudios Económicos, 1993, vol. 8, issue 1, 57-63

Abstract: This paper analyses the effect of an increase of the enodwment in a two-good n-country model. It is shown that the endowment of good one can go up and the price of the same good relative to good two can also increase. However, this "perverse" effect cannot occur in both goods if the economy is at a tatonnement stable equilibrium. This is a new restriction in the form of the equilibrium manifold of an exchange economy. It is also shown that this "double perversity" is the case with normal goods when the equilibrium is unstable.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:emx:esteco:v:8:y:1993:i:1:p:57-63

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