On the Static and Dynamic Costs of Trade Restrictions

Charles Marrewijk and Koen Berden
Additional contact information
Koen Berden: Erasmus University Rotterdam, The Netherlands.

No 2004-14, Centre for International Economic Studies Working Papers from University of Adelaide, Centre for International Economic Studies

Abstract: We analyze the costs of trade restrictions for a small developing economy. Capital goods are only introduced on the market if it is profitable to do so. The economy evolves to a balanced growth path in which income, welfare, and the share of introduced capital goods increase if trade restrictions fall. The adjustment path is asymmetric: an increase in trade restrictions will slow-down economic growth, while a decrease may give rise to a rapid catch-up process. The static costs of trade restrictions are smaller than the dynamic costs if, and only if, it changes the share of introduced capital goods.

Keywords: Growth; development; static and dynamic costs; trade restrictions; new goods. (search for similar items in EconPapers)
JEL-codes: E F O (search for similar items in EconPapers)
Pages: 36 pages
Date: 2004-11
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: On the Static and Dynamic Costs of Trade Restrictions (2004)
Working Paper: On the static and dynamic costs of trade restrictions (2004)
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