A new Ricardian model of trade, growth and inequality- The role of financial capital

Sugata Marjit

No 2020-28, Discussion Papers from University of Nottingham, GEP

Abstract: The classical Wage Fund (Financial Capital) framework is integrated with the Ricardian model of comparative advantage. It can easily and effectively reflect on critical contemporary issues without the ammunitions of a more complex neoclassical system. Some of the results are as follows. Trade pampers inequality across the globe independent of trade patterns. It is likely to increase growth rate but that rate declines over time. Technological progress without capital accumulation magnifies inequality in or out of steady state. Financiers may wish to invest in innovations and outsource production to the rest of the world. Financial crisis in terms of credit shortage hurts workers but benefits capitalists etc. Interestingly this Ricardian model with capital and labour replicates many iconic neoclassical results without neoclassical assumptions.

Keywords: New Ricardo; Neoclassical; Trade; Growth; Inequality (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cwa and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:2020-28

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