Fiscal Policy, Specialization, and Trade in the Two-Sector Model: The Return of Ricardo?
Marianne Baxter ()
Journal of Political Economy, 1992, vol. 100, issue 4, 713-44
This paper develops a two-sector neoclassical model of international trade with endogenous capital accumulation and intertemporal optimization. In contrast to the traditional "2 x 2" model, there is a Ricardian implication that countries specialize according to comparative advantage. Consequently, the theory predicts that government expenditure policies are unlikely to affect the established pattern of specialization and trade, but that changes in tax policies can result in a dramatic reorganization of world production. Further, the dynamic 2 x 2 x 2 model can explain many of the salient features of international trade that are problematic for the standard Heckscher-Ohlin-Samuelson model. Copyright 1992 by University of Chicago Press.
References: Add references at CitEc
Citations: View citations in EconPapers (77) Track citations by RSS feed
Downloads: (external link)
http://dx.doi.org/10.1086/261837 full text (application/pdf)
Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JPE for details.
Working Paper: Fiscal policy, specialization, and trade in the two-sector model: the return of Ricardo? (1991)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:v:100:y:1992:i:4:p:713-44
Access Statistics for this article
More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().