EconPapers    
Economics at your fingertips  
 

Capital Accumulation and Dynamic Gains from Trade

B Ravikumar, Ana Maria Santacreu and Michael Sposi ()

No 2017-5, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We compute welfare gains from trade in a dynamic, multicountry model with capital accumulation. We examine transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization. Both the relative price of investment and the investment rate respond to changes in trade frictions. Relative to a static model, the dynamic welfare gains in a model with balanced trade are three times as large. The gains including transition are 60 percent of those computed by comparing only steady states. Trade imbalances have negligible effects on the cross-country distribution of dynamic gains. However, relative to the balanced-trade model, small, less-developed countries accrue the gains faster in a model with trade imbalances by running trade deficits in the short run but have lower consumption in the long-run. In both models, most of the dynamic gains are driven by capital accumulation.

Keywords: Welfare gains from trade; Dynamic gains; Capital accumulation; Trade imbalances (search for similar items in EconPapers)
JEL-codes: E22 F11 O11 (search for similar items in EconPapers)
Date: 2017-02-27
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
https://research.stlouisfed.org/wp/2017/2017-005.pdf Full text (application/pdf)
https://dx.doi.org/10.20955/wp.2017.005 https://dx.doi.org/10.20955/wp.2017.005 (text/html)

Related works:
Journal Article: Capital accumulation and dynamic gains from trade (2019) Downloads
Working Paper: Capital Accumulation and Dynamic Gains from Trade (2018) Downloads
Working Paper: Capital Accumulation and Dynamic Gains from Trade (2018) Downloads
Working Paper: Capital Accumulation and Dynamic Gains from Trade (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2017-005

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2017.005

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-10-20
Handle: RePEc:fip:fedlwp:2017-005