Increased Input Supplies, Government Size, Welfare and Trade in the Presence of Increasing Returns

Sajid Anwar

Journal of Economics, 2003, vol. 78, issue 3, 259-272

Abstract: This paper examines the impact of exogenous changes in the supply of primary factors of production on the relative size of government and welfare in the context of a model where increasing returns are present in the production of an intermediate good. It is shown that an increase in the supply of labor (capital) increases the relative size of government if the share of labor is large (small) in the public sector as compared to the private sector. An increase in the supply of capital increases welfare but the impact of an increase in the supply of labor cannot be unambiguously determined. In the context of a North-South model, the paper also considers the pattern of trade. It is shown that North will export capital-intensive intermediate goods to the South.

Keywords: Keywords: size of government; factor mobility.; JEL classification: F20; H10; H41. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:78:y:2003:i:3:d:10.1007_s00712-002-0568-3

DOI: 10.1007/s00712-002-0568-3

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