The Interest Rate Equalisation Theorem with Non-Traded Goods

L. Mainwaring

Chapter 7 in Fundamental Issues in Trade Theory, 1979, pp 90-98 from Palgrave Macmillan

Abstract: Abstract In his extensive discussion of Ricardian time-phased systems [4] Paul Samuelson returned to the subject of interest rate equalisation through trade. Because of the problem of Wicksell effects in Sraffa-Leontief systems, Samuelson has shifted the emphasis of his discussion on to the ‘local’ theorem. The purpose of this essay is to show that some straightforward observations on the possibility of equalisation in a global context can be made. We shall suppose, as does Samuelson, that all trading regions share an identical technology. This is characterised in long-run equilibrium by the following price equations (1) P = ( 1 + r ) P A + w a ]]

Date: 1979
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DOI: 10.1007/978-1-349-04378-1_7

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