On the Static and Dynamic Costs of Trade Restrictions

Charles Marrewijk and Koen Berden
Additional contact information
Koen Berden: Erasmus University Rotterdam

No 2004-06, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

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: 31 pages
Date: 2004
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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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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2004-06

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